Amsterdam-based The Student Hotel has secured €82 million to develop and refurbish two hotel projects in Paris and Toulouse through an environmental, social and governance financing structure from Crédit Agricole CIB. This comes just over a month after the operator, developer and investor secured €90 million in financing for developing hotels and refinancing its existing assets in Spain.
This latest funding combines the characteristics of a green loan with a sustainability-linked loan, which the French bank reportedly is applying to a structured credit line for the first time in the European real estate investment industry.
Under the terms of the green loan, TSH is seeking the international BREEAM (Building Research Establishment Environmental Assessment Method) “very good” rating for both buildings. French bank Crédit Agricole CIB, which is acting as arranger, underwriter, bookrunner and agent, has coupled the green loan element of its financing package, which provides funding for TSH to improve the sustainability of its assets, with a “sustainability-linked margin” that sets environmental, social and governance goals that, if achieved, can result in interest rate cost savings.
“The terms of this combination green loan mirror the targets of our ambitious sustainability strategy that will overlay the entire European TSH portfolio, which is set to triple in size over the next five years,” said Lucas Rijckmans, chief of corporate services at TSH.
Nathalie Sarel, head of sustainable banking at Crédit Agricole CIB, added green finance is “playing a growing role” in guiding companies toward integrating ESG elements in their operations. “This is particularly important for the real-estate sector, which is a major source of the CO2 emissions that contribute to global climate change,” Sarel said.
TSH could save on the annual interest rate applied to the full €82 million green loan for every year TSH achieves the target ESG thresholds in the reduction of energy consumption, food-waste production and social diversity of its workforce. These goals are divided 50/50 between the TSH Group level, for the aggregated pan-European portfolio, and the two French assets being financed. For the Paris and Toulouse projects, TSH aims to meet, or undershoot, the Paris Climate Accord target that buildings should only consume 50 kWh per square meter.
TSH indicated it also is looking to reduce food waste and become smarter in food management by ensuring leftovers that can still serve as another meal are saved. The company wants to reduce food waste in its restaurants to 10 percent or less through partnering with initiatives such as “Zero Food Waste,” the automated food-waste monitor, and the European initiative “Too Good to Go.” The first hotels in the Netherlands are starting with these programs over 2019–2020 and the French market is expected to follow suit. Furthermore, over the next year, TSH plans to do away with all single-use plastic items in its restaurants, and is introducing new biodegradable disposables for items such as coffee cups and pizza boxes.
The Paris development accounts for 58 percent of the TSH financing package, and the Toulouse refurbishment for the remaining 42 percent.
The new financing also forms part of a €2 billion accelerated pan-European investment program by TSH that will increase the number of its hotels in operation across Europe from 13 to 38 over the next five years. It plans to operate more than 4,000 hotel and extended-stay rooms in France by 2022, according to the company.
TSH entered the French market in 2015 with a pilot site in Paris' La Défense district. Its second hotel in the city, within the 19th arrondissement, is due to open in March 2022 and will have an estimated 300 rooms over 11,000 square meters. The all-in cost of the project is calculated at around €65 million.
Construction of the Toulouse hotel in the Compans Caffarelli area began in September and is due to open in July 2021. TSH’s total investment in the Toulouse project is more than €45 million and will allow the extension and refurbishment of a former barracks into 12,000 square meters of student accommodations and a hotel, with 354 rooms, common areas and a rooftop with a pool.
TSH has about 5,100 rooms in 13 locations in Germany, Italy, the Netherlands, Austria and France, with student-only residences in Spain. The company has 10,000 rooms open or under development in 20 cities across Europe and aims to grow that number to 25,000 rooms by 2024.
Slated to open in 2020 are Hotels in Vienna; Bologna and Delft, followed by properties in Madrid, San Sebastian, Barcelona, Paris, Toulouse, Carcavelos, Lisbon, Porto, Rome and Florence due to open by 2022.