Deal with West Immo bank will allow loans on property in different states
Andrea Carpenter, EuroProperty
Standard Life has secured the first ever pan-European property loan facility.
The €150m facility, for Standard Life’s €500m European Property Growth Fund, was arranged by Germany’s West Immo Bank.
It will give the UK institution access to debt in four European jurisdictions: France, Germany, Spain and Belgium.
The fund, which raised €70m equity in October, will have raised a total of €150m at its second closing later this month. Most of the investors are UK institutions.
Pan-European funds have previously borrowed on a property-by-property basis, using lenders based in the country of the investment.
The main hurdle for apan-European facility has been cross-collateralisation, with lenders unable to create a single structure allowing recourse on loans to properties in different countries.
The new facility consists of a series of locally incorporated property companies belonging to the fund, which will each borrow on one asset.
These companies will then be held under the umbrella of a Luxembourg holding company.
The main recourse for West Immo for each loan is the property being lent on, but the structure is designed to be flexible enough to allow the lender to call on the fund’s other assets without falling foul of different countries’ legal restrictions or jeopardising the fund’s tax efficiency.
“We were looking to limit the risk for our investors as we are in a trough in the interest-rate cycle,” said Neil Cable, investment director with Standard Life.
He said that the facility enables the loan’s rate to be fixed for the life of the fund and does not expose it to any future narrowing of margins between financing and property yields.
