Sonae has raised Es6.8bn ($44m) of funding for the second phase of its GaiaShopping complex outside Oporto. The loan, arranged by Bankers Trust, is the first limited-recourse, long-term real-estate financing in Portugal to be provided mainly by foreign institutions, reports Alex Catalano.
Societe Generale, Banco Bilbao Vizcaya and Banco Sabadell contributed nearly three-quarters of the funding, with the agent bank, Banco Totta & Acores, being the fourth participant. The loan is for 10 years, which is longer than usual for real-estate funding in Portugal, and there is only very limited recourse to Sonae. The group has given bankers guarantees on completion and construction overruns, and also limited comfort on interest shortfalls.
“The biggest issues were the byzantine nature of Portuguese lease laws, security and tax,” notes Richard Mully, managing director of Bankers Trust in London.
Because non-Portuguese investors are subject to withholding tax, the funding was structured to be first provided fully onshore by the Portuguese agent bank, with back-to-back guarantees with syndicate members off-shore. The legal charge over the property also needed creative structuring.
According to Mully, Sonae wanted to diversify its traditional funding base and draw in non-Portuguese banks. “There was a lot of interest in Sonae. And people were quite attracted to the idea of shopping centres in Portugal as a stable, long-term game,” he notes.
Sonae is Portugal’s largest private-sector industrial conglomerate and the leading shopping- centre operator and owner. GaiaShopping is the dominant out-of-town centre in the Oporto area. The second phase will add 24,292m2 (261,485 sq ft) to the existing complex, bringing the total size up to 56,500m2 (608,180 sq ft). It has already secured four well-known retail anchors: British Home Stores, C&A, Marks & Spencer and Zara. In addition, there will be a multiplex cinema run by Warner-Lusomundo.
