German private debt fund Deka Realkredit Klassik (DRK) is now 94.4 percent invested following the acquisition of a senior tranche of a French commercial property loan from DekaBank.
The tranche forms part of a financing for the acquisition of an office and commercial building in Paris, arranged by DekaBank and German banking peer Helaba, according to a statement on Tuesday.
“DekaBank and Helaba arranged the whole loan together. The portion of DekaBank was divided by DekaBank into a senior and a junior tranche. The senior tranche was sold from DekaBank to the fund Deka Realkredit Klassik,” Torsten Knapmeyer, managing director at Deka Immobilien, told Private Debt Investor.
The financing in Paris brings to eight the number of loans in the fund with property relating to France, out of a total of 21 loans, and is a further investment by DRK in a prime location of a European capital city. DRK currently had fund assets amounting to about €370 million ($513.5 million; £307.7 million) as of 31 December 2013.
The Haussman-style property, which was completely renovated in 2005, is located on the Champs-Élysées and has a total area of 10,500 square metres. Tenants include flagship stores such as sporting goods manufacturer Nike and fashion brand Tommy Hilfiger.
Giving his reason for investing in this latest loan, Knapmeyer said,“It is a well-structured transaction with conservative covenants secured by [a] high quality and well located property [with] experienced sponsors.”
Addressing any concerns about investing in loans backed by French property, given some recently drawn-out court proceedings as a result of a French legal consideration for borrowers called ‘safeguard’, Knapmeyer said “[The ]investment strategy is to invest in prime locations in Great Britain, France, Germany and North America in due consideration of a conservative risk profile.”
In respect of each prior-ranking tranche which Deka Realkredit Klassik acquires, DekaBank undertakes to hold a junior tranche equating to a minimum of 50 percent of the fund´s fraction until repayment of the loan.
“The fund Deka Realkredit Klassik invests only in senior tranches of loans from DekaBank. The actual amount invested in senior tranches is €370 million,” Knapmeyer said.
DRK was launched in 2009 as the first debt fund under German investment law. It exclusively buys senior debt relating to existing commercial property.
The management of the fund is rated AA+ and “very good” by independent ratings agency Scope.