HB Reavis has secured a €510 million refinancing of its Varso Place complex in Warsaw, an office-led mixed-use development that includes the EU’s tallest tower.
The developer agreed the refinancing with five incumbent bank lenders to the project, and two additional banks, adding €35 million of debt compared with the previous financing of the complex in 2023. HB Reavis said the deal was completed on “improved terms” to the previous financing.
The transaction was divided into a €258 million facility for the main element of the scheme, Varso Tower, and €252 million for the associated buildings Varso 1 and Varso 2. The loan is due to mature in September 2030.
PKO Bank Polski and Erste Group Bank joined the existing lender consortium, providing €85.5 million and €55 million, respectively. The five other lenders in the deal comprised: Santander Bank Polska, which provided €100 million; Germany’s Helaba with €100 million; Bank Pekao with €89.5 million; Berlin Hyp with €40 million; and Deutsche Hypo – NORD/LB Real Estate Finance with €40 million.
In total, Varso Place contains 1.6 million square feet of space. The most recent addition to the complex is the circa 1,000-foot tall Varso Tower, which was completed in 2022. The tower was designed by architecture firm Foster + Partners. It mainly contains offices, plus a restaurant. The lower-rise Varso 1 and 2 buildings contain offices, hotel space, retail and restaurants. The scheme holds a BREEAM ‘Outstanding’ certification, as well as a WELL Gold standard.
The previous financing, of €475 million in February 2023, was claimed by HB Reavis to be the largest commercial real estate financing in the Central and Eastern European region for a single asset at that time.
Tomas Krajcir, chief financial officer at HB Reavis, said the trust of the lenders and “improved conditions within financial markets” enabled the firm to increase the financing amount and secure more favourable terms this time around.
Lender appetite for prime, sustainable office assets in European markets has increased this year, according to market sources. Explaining PKO Bank Polski’s decision to join the financing consortium, Agata Gola, the Polish bank’s head of property finance, described the scheme as “one of the most modern and sustainable projects in Poland, which is evident in the strong interest from tenants in the office sector”.
She added: “By supporting such investments, we affirm the strategic direction of the real estate market, driven by innovation, sustainability and excellence.”
A July report by property services firm BNP Paribas Real Estate noted an uptick in new office space in the Polish capital. The firm said the Warsaw office market saw new supply peak during Q2 at almost 861,000 square feet, the highest quarterly total since late 2022. Completions included The Bridge, a 506,000-square-foot scheme developed by Ghelamco.
However, Małgorzata Fibakiewicz, senior director of office agency at BNP Paribas Real Estate Poland, said developers have significantly scaled back new projects, with 1.6 million square feet under construction in Warsaw, which she described as “the lowest development pipeline in years”. She added: “Modern office space is likely to become scarcer in the coming years, especially in prime locations.”