Redefine International, a real estate company with listings in London and Johannesburg, has reached an agreement to restructure the EUR 117 mln in financing facilities for its VBG portfolio in Germany.
Redefine International, a real estate company with listings in London and Johannesburg, has reached an agreement to restructure the EUR 117 mln in financing facilities for its VBG portfolio in Germany.
The VBG assets comprise four individual office properties situated in Berlin, Dresden, Cologne and Stuttgart, all of which are currently let to a German government-backed social insurance body. The leases have unexpired terms of between 7.8 years and 12.6 years and are indexed to 100% of German CPI. The VBG portfolio has a current annual rent roll of EUR 7.6 mln.
The deal involves a major pension fund taking a 50% interest in the VBG holding company for a nominal fee as a joint venture partner alongside Refine International.
The newly-established joint venture company, together with certain subsidiaries, has reached agreement with the servicer of the VBG facilities to dispose of the VBG assets to new subsidiary companies within the joint venture vehicle. The proceeds from the disposal of approximately EUR 80 mln will be used to settle the original VBG facilities in full. The facilities have an outstanding balance of EUR 117 mln.
The gross acquisition cost, inclusive of transaction costs, of EUR 85 mln will be partly funded by the joint venture company with a new five-year EUR 57 mln debt facility secured from a German bank. The joint venture partners are injecting EUR 14 mln each for their 50% interests.
The new debt facility has been secured at a margin of 1.72% per annum which, together with current five year swap rates, provides an indicative all in rate of 2.8% per annum. This will result in an initial yield on equity in excess of 19% on Redefine's investment.
The restructuring process is expected to complete by end-August 2012.
Redefine International is domiciled in the Isle of Man and has investments in the UK, Germany, Switzerland, Channel Islands, the Netherlands and Australia. It is part of Redefine Property Group, a holding company which is listed in Johannesburg with a market capitalisation in excess of £2 bn (EUR 2.5 bn).
