1.5M SF German Office And Hotel Scheme Seeks Debt Extension
The owners of a giant office and hotel “groundscraper” complex in Frankfurt, Germany, are seeking a one-year extension on a €530M (£441M) loan secured against the building.
A notice to investors that bought bonds secured against The Squaire complex next to Frankfurt Airport says the borrower requested an extension to the debt, which matures in December. It adds that the servicer managing the debt on behalf of bondholders was considering the request.
The Squaire is one of the largest single buildings in Europe and boasts a unique layout. The structure is 1.5M SF, nine stories high and 660 metres long.
It is owned by a consortium that includes London-based private investment manager AGC Equity Partners and Korean investment firm Hana Financial Investment.
The consortium bought the building from Blackstone for €1B in 2019. The U.S. investor had acquired it as part of a €3.5B purchase from developer IVG, which hit financial difficulties in the wake of the credit crunch.
In 2019, the building was refinanced with loans maturing in December 2024. in 2021, Bank of America securitised those loans. At that time, the building was valued at €832M.
The building comprises 1M SF of offices, two hotels totalling 371K SF, and about 130K SF of parking space. It is attached to Frankfurt Airport via a pedestrian bridge.
While the hotels are performing in line with 2019 levels, income from the office element of the scheme is less certain, according to a July report on the securitised loans from ratings agency S&P.
The office, retail, storage and parking element of the building was 16% vacant at the end of 2023, S&P said. Two of the four largest office tenants, accounting for 14% of the rent, were also experiencing financial difficulties at that time, meaning they might vacate their spaces. The largest tenant is KPMG, which accounts for 53% of the rent and has a lease that expires in 2028.
The last published valuation of the building was €829M in March 2023, but S&P said it thinks the value could have fallen as low as €517M.
