Valesco acquires Brussels Finance Tower in EUR1.2bn deal
The Valesco Group (Valesco), a London headquartered European real estate investment and asset manager, backed by Meritz Securities (Meritz), one of the largest South Korean institutional investors, has acquired the Finance Tower, a skyscraper located in Brussels’ CBD for cEUR1.2 billion, from Breevast and ZBG, in an off-market transaction.
The purchase price represents an acquisition yield of 4.85 per cent.
The landmark purchase represents the largest single asset acquisition in mainland Europe in recent years, behind Paris’ Coeur Défense, and the second largest single asset acquisition in mainland Europe ever.
Valesco secured a consortium of top-tier lenders comprising Allianz, LGIM, SMBC and Bayern LB to provide a compelling cEUR720 million senior loan facility. Valesco has partnered with a number of the lenders on previous deals and so this transaction also represents a continuation of those relationships.
The 142 metre tall Finance Tower is an iconic freehold Grade A building and the largest commercial office premises in Belgium, providing 185,754 sqm of space over 36 floors. Delivering an annualised rent roll of EUR59 million, the asset is let on a 15 year, indexed linked lease without breaks to the Régie des Bâtiments, a Belgian Government agency on behalf of the Ministries of Finance and Social Security. Circa 4,600 employees are based at the property, which also offers 712 parking spaces, an 850-seat restaurant and a 400-seat conference centre.
Shiraz Jiwa, Founder and CEO of The Valesco Group, says: “Our forensic approach to real estate risk and our ability to unlock complex structures has enabled us to execute on this landmark and sought-after asset with the backing of a highly distinguished institutional investor in Meritz. This transaction continues our strong commitment to the European market in which we have invested €2 billion in the last 20 months alone and see substantial potential to further deploy capital to deliver value for our institutional and sovereign investors.
“Together with the cEUR720 million debt package we will deliver investors highly attractive cash on cash returns. The exceptional quality of the tenant and asset coupled with the strategic and dynamic CBD micro-location, with the backdrop of strengthening Brussels real estate fundamentals, offers further asset management and value creation opportunities for capital appreciation.”
Henk Brouwer, CEO of Breevast and member of the Management Board of ZBG, adds: “The sale of the Finance Tower is a significant achievement, representing a commitment by ZBG and Breevast of almost two decades to realising a high quality asset in the heart of Brussels. This successful transaction reflects the growing international interest in large-scale urban revitalisation projects which we specialise in. We have a full pipeline of residential, commercial and office projects which aim to address the growing demand for high quality urban real estate.”
The Finance Tower’s prime location, in the heart of Brussels CBD, finds the Court of Justice, the Royal Palace and the Belgian Stock Exchange within the immediate vicinity, whilst both Central and North Station are a 10-minute walk. Furthermore, the micro-location of the asset is expected to evolve over the coming years, following the approval of a masterplan which will see the delivery of circa 43,000 sq m of residential space, 19,000 sq m for mixed use and 5,000 sq m of retail. The first phase is expected to be completed in 2021.
At the heart of Europe’s governing regime, the Brussels office market is operating at record low vacancy rates with the CBD offering a vacancy of just 3.3 per cent and 0.6 per cent for Grade A buildings. With relatively low levels of new supply coming to the market over the forthcoming years, rents are on a strong upward trajectory and long-term prime investment yields are tighter than 3.25 per cent.
The transaction represents the third time Valesco has been backed by Meritz Securities in the last 18 months. The acquisition is further evidence of Valesco’s expertise in delivering attractive off-market investment opportunities for investors as well as its ability to execute on intricate and complex transactions. JR AMC and AIP Asset Management are the registered South Korean domestic asset management companies supporting the deal.
Cushman & Wakefield, Ashurst, PwC and Arcadis advised the buy-side and CBRE, Loyens Loeff, Stibbe and PwC legal advised the sell-side.