Redefine International JV's with pension fund

Posted On Saturday, 04 August 2012 20:33 Published by eProp Commercial Property News
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Redefine International, the London-based diversified income-focused property company, has agreed terms to restructure its VBG property assets in Germany and the associated financing facilities


The restructuring and refinancing of this portfolio will result in the Company owning a 50% interest in the VBG assets together with a major pension fund as its joint venture partner.

As part of the restructuring, the Company has agreed to sell, for a nominal amount, 50% of its interest in the VBG holding company to the pension fund. This newly established joint venture company, together with certain of its 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 €80.0 million will be used to settle the original VBG facilities in full. The facilities have a current outstanding balance of €117.3 million.

The gross acquisition cost (inclusive of transaction costs) of approximately €84.9 million will be partly funded by the joint venture company with a new five year €57.0 million debt facility secured from a German bank, with both joint venture partners injecting €14.0 million (£11.7 million) for their 50% interests. The new debt facility has been secured at a margin of 1.72% p.a. which, together with current five year swap rates, provides an indicative all in rate of 2.8% p.a. This will result in an initial yield on equity in excess of 19.0% on the Group’s investment.

Contracts have been notarised to implement the above transactions and the restructuring process is anticipated to complete shortly after Redefine International’s financial year end on 31 August 2012.

The VBG assets comprise four individual office properties situated in Berlin, Dresden, Cologne and Stuttgart in Germany, 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 rent roll of €7.6 million p.a.

The Company has now restructured or repaid £139.9 million of legacy financing facilities since its interim results, significantly reducing both leverage and near term refinancing requirements.

Greg Clarke, Chairman of Redefine International PLC, says, “The restructuring of the VBG portfolio is another significant milestone in successfully implementing our strategy of reducing the Group’s leverage and exposure to short term debt maturities. The establishment of a joint venture with a major pension fund also secures an alternative source of funding and the ability to capitalise on market opportunities.”

Last modified on Wednesday, 14 May 2014 17:35

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