Israeli real estate developer AFI Europe, which owns the AFI Palace Cotroceni shopping mall in Bucharest, has signed a real estate financing agreement for EUR 220 million with the consortium of banks comprised of Deutsche Pfanbriefbank, Erste Group Bank and Raiffeisen Bank.

The is actually a refinancing on a EUR 234 million loan that AFI Europe took from German bank Hypo Real Estate back in 2008 for its EUR 300 million investment in AFI Palace Cotroceni, which is one of the largest malls in Romania. The mall was opened in November 2009 and is currently valued at EUR 375 million.

“We appreciate the consortium’s trust in AFI Europe and in AFI Palace Cotroceni, for granting such a significant loan of EUR 220 million. The process has been extremely challenging given the amount of the loan, the participation of three major banks and the fact that it was for a project in Romania. However, as the successful result shows, achieving financing in large sums is possible in Romania if it is for a good project and an experienced developer,” said David Hay, CEO of AFI Europe Romania.

Law firm Dentons was the legal counsel for AFI Europe in this deal, while CMS Cameron McKenna represented the financing consortium. Deutsche Pfanbriefbank is the former Hypo Real Estate, which was taken over by the German state.

AFI Palace Cotroceni has a gross leasable area of over 81,000 sqm which is currently 98 percent occupied. Its net operating income (NOI) for the first quarter of 2014 totaled EUR 7.3 million, posting an increase of 6.7 percent compared to the same period last year. Based on first quarter results, NOI for 2014 is assumed to pass EUR 29 million.

AFI Palace Cotroceni, showed an increase in the number of visitors to an average of 55,000 per day in Q1 2014.

AFI Europe also has a mall in Ploiesti and two operational office buildings in Bucharest, next to AFI Palace Cotroceni. A third office building is currently under construction.

Andrei Chirileasa, andrei@romania-insider.com