US lenders have taken the lead in all the largest transactions closed in France so far this year, beating local players as well as German banks which have a smaller underwriting capacity, according to Finae Advisors’ partner Delphine Benchetrit.
US lenders have taken the lead in all the largest transactions closed in France so far this year, beating local players as well as German banks which have a smaller underwriting capacity, according to Finae Advisors’ partner Delphine Benchetrit.
Speaking at PropertyEU’s French investment briefing on Wednesday, Benchetrit noted that American lenders are increasingly active as they follow their clients on their journey to Europe.
‘France has seen many large-ticket deals this year and all of them have been highly leveraged and have been financed by US banks. This is mainly because local lenders have a limited underwriting capacity of €100-150 mln and a limited leverage offering of 60-65%,’ Benchetrit said.
She cited Bank of America Merrill Lynch’s financing for Lone Star's acquisition of Coeur Défense as a striking example. BAML provided a €930 mln loan for the asset, reflecting a 62% LTV on the senior loan and 71.6% LTV on the whole loan on the asset which is currently valued at nearly €1.3 bn.
‘German and French banks are the market leaders in France but they are facing growing competition, from insurers and debt funds and they are not fully aware of this,’ Benchetrit added.
Commenting on the financing landscape in France versus other mature markets in Europe, she also pointed to the lack of mezzanine debt which remains ‘a very difficult play’. ‘Up to recently, pricing for mezzanine was not making sense, with margins around 16-18%. However, we have seen three-four deals involving mezzanine this year so it looks like availability is increasing but the cost still largely depends on the quality of the asset and on the sponsor involved.’
