Tishman Speyer has financed its ambitious circa €220m Pacific Tower acquisition in Paris’ La Défense district with a combined €163m five-year senior loan significant capex facility with Deutsche Pfandbriefbank (PBB) and Helaba, as the international developer and investor seeks to reposition the asset upmarket.
PBB and Heleba have backed Tishman’s business plan which broadly includes significantly improving the fit-out standard of the office block to materially improve the tower’s value over the medium term.
As such, Tishman has agreed an unusually large capex facility for the 24-story, thought to be above €40m, to enable the developer to re-let the asset at significantly higher rental levels in future and, eventually sell at a premium to the combined purchase price and asset management costs once the project is complete.
The blended margin of the senior and capex facilities is thought to be around 300 basis points over three-month EURIBOR.
Tishman’s strategy for Pacific Tower reflects a counter-cyclical play for itself and the two banks, with the developer taking on potential letting risk at a time when confidence is yet to return to French office market’s following last summer’s Eurozone debt crisis.
Completed in 1992, Tour Pacific features a 24-story, two-tower design. It is approximately 70% occupied, primarily by Société Générale, which has a short-term lease expiration.
“We have been looking for opportunities to increase our footprints in major European cities, and Tour Pacific fits very well with the rest our portfolio,” said Tishman Speyer co-CEOs Jerry and Rob Speyer.
“We look forward to transforming it and offering it to tenants as one of the most desirable business locations in the Paris market.”
Financing for the transaction was provided by Helaba Landesbank Hessen-Thüringen and Deutsche Pfandbriefbank.
Tishman acquired the asset through an auction managed by JLL.