Blackstone is to fund its latest push into the Nordic real estate markets with a €2.6 billion financing of its recently acquired Sponda platform in Finland, in one of the cycle’s largest real estate lending deals.
US investment banks Citi and Morgan Stanley, as well as Royal Bank of Canada and Goldman Sachs’ mezzanine lending business, have been lined up to provide the facilities, which will be secured by the bulk of Sponda’s mixed-use portfolio of prime properties.
In June, Blackstone agreed a deal to buy the issued and outstanding shares in Helsinki-listed Sponda for an aggregate equity purchase price of around €1.76 billion. As at 31 March 2017, the fair value of Sponda’s 13 million square feet of investment properties was €3.8 billion.
Blackstone has now lined up the quartet of lenders to finance the vast majority of the portfolio, which includes offices, retail, logistics and residential real estate. The five-year deal is understood to comprise in the region of €2.2 billion of senior debt and around €340 million of mezzanine debt across three separate facilities.
Citi, Morgan Stanley and Royal Bank of Canada are providing senior debt across two of the loans, totalling around €1.6 billion, with each bank providing equal proportions. In the third loan, Citi and Morgan Stanley are providing senior finance on a 50/50 basis.
Goldman Sachs will feature in the deal as the sole mezzanine provider, Real Estate Capital understands. The firm is investing in the deal through its third-party Broad Street Real Estate Credit Partners lending business, which sits within the group’s merchant bank.
The financing reflects a circa 75 percent loan-to-value of the collateral and the senior debt is understood to be priced at just above 200 basis points. At this stage, it is unclear whether the lenders will aim to syndicate or securitise an element of the debt.
Blackstone bought Sponda predominantly through its Blackstone Real Estate Partners Europe V fund as well as its global Blackstone Real Estate Partners VIII. The deal is the continuation of a significant push into the Nordic markets for the New York-based private equity giant. In December 2015, it took control of Certeum, a Helsinki-based logistics and industrial property investment company, after acquiring a 50 percent stake from Varma Mutual Pension Insurance Company.
In March 2016, Bank of America Merrill Lynch (BAML) provided a €575 million loan to refinance Certeum, priced at around 300bps.
Blackstone made a significant move in the Nordic market in July 2015 when it agreed to acquire a portfolio of Scandinavian properties for NKr22 billion (€2.48 billion) as well as a 34 percent stake in subsidiaries of Norwegian investment management firm Agasti Holdings.
“We have had a long-standing ambition to increase our presence in the Nordics,” commented James Seppala, head of European acquisitions at Blackstone, at the time.
All parties declined to comment on the Sponda financing.