Aareal Bank is underwriting one of the first jumbo loans of 2017, for London & Regional Properties’ £600 mln (€696 mln) acquisition of two Hilton hotels in the UK, writes Jane Roberts, editor of PropertyEU's new FinanceWatch publication.
The German bank is providing a £450 mln whole loan for the Livingstone brothers' deal to buy the Hilton London Metropole and the Hilton Birmingham Metropole through their company, London & Regional Properties. The London hotel is located on Edgware Road between Marble Arch and Paddington on the western fringe of the West End.
Property Week reported last month that owner Tonstate Group has agreed to sell the four-star hotels which together have more than 1,800 rooms, making them among the largest in the country.
Aareal is effectively increasing existing exposure to the assets. In June 2014 the bank provided £300 mln in a five-year facility to Tonstate to refinance the hotels.
Sources in the lending market said the bank is seeking to sell a small mezzanine participation in the new facility, of about £40 mln-£50 mln. The margin for the mezzanine is understood to be low, in the mid single digits percent.
Assuming the deal closes soon, it will continue into 2017 the successful run of high-profile large deals that the Wiesbaden-based bank has completed in the last 12 months.
Its 2016 European hotel financings included €182 mln for a PPHE Dutch portfolio and £200 mln for the Westmount in London. In other sectors Aareal backed VGP and Allianz's German logistics portfolio with a €368 mln loan and underwrote a €610 mln facility with an option to increase to €1bn for Invesco Real Estate’s flagship, pan-European fund, syndicating half to Allianz.
In November the bank upped its forecast for 2016 operating profit and its expected new loan volume from between €7 bn and €8 bn to between €8 bn and €9 bn, on the back of a busy third quarter.
Aareal declined to comment on the London & Regional transaction.
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FinanceWatch focuses on financing and debt in the European real estate markets. Initially published twice a year, FinanceWatch is an A-Z of who’s lending, supported by analysis and commentary on the key trends and strategies driving the market.
The first edition is published in March 2017 and will be circulated at the MIPIM real estate fair in Cannes in March.
