Pension fund makes €450m debt investment in Berlin mall

German pension fund BVK has provided €450 million senior debt in the refinancing of a Berlin mall.

A German pension fund has made another large investment in debt, providing €450 million for the refinancing of Mall of Berlin in the German capital.

Bayerische Versorgungskammer (BVK) contributed the senior portion of a larger €600 million refinancing of the new shopping centre, which saw Deutsche Hypo take a subordinate tranche of €80 million and two credit funds of BNP Paribas REIM Germany take the €70 million most junior piece.

The ten-year financing has a loan-to-value of around 60 percent, given a valuation of around €1 billion, and the senior portion of the loan is understood to have had a margin of less than 100 basis points above Euribor.

BVK’s involvement is part of a trend by German institutional investors to move into real estate lending and marks one of the largest-ever debt financings by a pension fund in Germany. It follows the pension fund’s completion of a €300m refinancing of CA Immo’s Tower 185 in Frankfurt last October.

“We are seeing pension funds enter the lending market due to the very low interest rates,” said Oliver Schinkewitz, partner at Primor Capital, the financial advisor to the sponsors.

“BVK could look to invest into the stock exchange, which is more risky, or the bond market, which is very low return, so if you have annual inflows of €5 billion or €6 billion a year you have a problem”, he said. “They want to compete directly with the banks and BVK has the experience and ability to do that as they are also buyers of real estate.”

The 80,000 sq m mall, which is owned by Arab Investments and German property company High Gain House Investments is due to open on 25 September. It also includes a later 30,000 sq m phase of residential development. The asset is situated in Berlin-Mitte, near Potsdam Square.

The new financing replaces a club deal put in place in 2010 involving Helaba, Eurohypo, UniCredit, DG Hyp and Landesbank Berlin. The club, excluding Eurohypo, competed to put in place a new investment loan but ultimately lost out to the new consortium.