HSH Nordbank will make a €65 million loan available toward the financing of a real estate portfolio by Delta Lloyd Dutch Property Fund C.V. in Amsterdam. The property fund is a member company of Delta Lloyd Group that is about to be launched for institutional investors and other qualified investors in the form of a non-listed Dutch REIT. The fund will seek to set up, before the end of 2010, a diversified portfolio of residential, office and retail properties with an investment volume of €500 million.
The currently financed property portfolio consists of eight office buildings and four retail properties. The office properties are located in Hilversum, Utrecht, Arnhem, Delft, Zeist, Breda and The Hague; the retail properties are situated in Ridderkerk, Rijswijk, Arnhem, and Zevenaar. The total market value of the portfolio to be acquired equals just short of €160 million, which would translate into an initial loan-to-value ratio (LTV) of slightly over 40%.
"From our point of view, the transaction represents a rather safe and sound case of real estate financing," elaborates Peter Axmann, Global Head of Real Estate at HSH Nordbank AG. "The portfolio has a well-diversified tenant structure. This means that the rent default risk is widely spread. Moreover, this is a rather conservatively geared transaction where the investor contributes more than half of the required funds in the form of equity."
The market environment in the Netherlands has clearly improved again in the recent past, particularly for office real estate. The office market is undergoing a recovery phase following several difficult years, and the vacancy rates continued to decline in 2007. At 10.7% on average, they undercut last year's figure by about 1.8%. The floor space take-up has considerably increased, whereas the floor space supply dropped.
Meanwhile, HSH Nordbank has established itself in the Netherlands as the biggest foreign real estate underwriter. In 2007 as in 2006, the Nordbank concluded new business in excess of €1 billion. It involved nearly 40 transactions in the Netherlands, Belgium, and Luxembourg.
Source: HSH Nordbank