BAML in €470m refinance of IVG’s Squaire as sale collapses

IVG has opted for a refinancing of its The Squaire project in Frankfurt following an unsuccessful sales process that saw bidders fail to hit the company’s €700m reserve price. Bank of America Merrill Lynch has provided a €470m, five-year loan, which at IVG’s valuation would be a 67% loan-to-value.

IVG has opted for a refinancing of its The Squaire project in Frankfurt following an unsuccessful sales process that saw bidders fail to hit the company’s €700m reserve price.

Bank of America Merrill Lynch has provided a €470m, five-year loan, which at IVG’s valuation would be a 67% loan-to-value.

squaire croppedThe Squaire has been an symbol for IVG’s troubled last few years. The company spent €1bn building the 2.2m sq ft mixed-use development above the railway at Frankfurt Airport, dramatically more than its valuation since it was completed in 2010. Its office tenants include KPMG and Lufthansa.

Ralf Jung, chief executive, said: “The offers we received did not match our valuation of this property. At the same time, the refinancing obtained makes it commercially attractive for us to keep The Squaire in our portfolio. It shows a commercial viability well above total portfolio’s average”.

Fabian John, head of corporate finance added: “The refinancing terms ensure that, with its current letting levels, The Square will deliver an earnings contribution in the double-digit millions”.

The building was put up for sale last September and last month three bidders were given the opportunity to firm up their bids, the company said in a statement. However, none bid high enough for the company to opt for a sale.

IVG was saved from insolvency in September last year when it was taken over by a consortium of hedge funds including Cerberus Capital Management, Varde Partners, Apollo Global Management and TPG Capital.

Deutsche Bank completed a €1.5bn refinancing of IVG’s portfolio in October in order to put the company on a more stable footing, €679.9m of which was securitised through the bank’s BONN CMBS last month.

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