German real estate investment trust Alstria Office REIT has said it has secured EUR 95 million in debt refinancing as part of its strategy to align its underlying financing with its asset-specific business plans and increase the flexibility of its credit lines.
German real estate investment trust Alstria Office REIT has said it has secured EUR 95 million in debt refinancing as part of its strategy to align its underlying financing with its asset-specific business plans and increase the flexibility of its credit lines.
Alstria said the transaction together with recent asset sales reduced the loan-to-value (LTV) ratio under the existing credit line from 58.8% to 57.5%. 'This increases the flexibility within the company's most important credit facility.'
The new credit facility has a seven-year maturity and is priced at 115 bps above the three-month Euribor rate. It has an 80% loan to value and a 100% interest cover covenant. The new facility is secured on a non-recourse basis against two assets from Alstria's Hamburg portfolio with long-term lease contracts and high quality tenants.
Alstria said it had been working on reducing the LTV risk under its main facility since the end of the first quarter 2008, which allowed the company to secure non-core asset sales and refinancing before the freeze of the credit market that has occurred.
Olivier Elamine, Alstria’s CEO, commented: 'Having taken these steps, our balance sheet today can support a further yield expansion of more than 20 bps which would take the overall valuation yield of our portfolio to around 5.9%, reflecting a further potential devaluation of around EUR 70 mln. Following our EUR 29.8 mln write-down in the first six months of 2008, this gives us more leeway to react to further yield shifts in the market.’
‘Asset management will continue to be the main focal point within our portfolio over the coming months. However, we also anticipate the need for real estate companies to deleverage their balance sheets, as a consequence of the radical change in the credit environment. We will continue to focus our attention and efforts on this issue, as we have already done during the last six months.'
Alstria owns a diversified portfolio comprising 90 properties with an aggregate lettable space of approximately 943,000 m2 across Germany. The portfolio is valued at EUR 1.9 bn.
