Berlin Hyp and Helaba agree 60bps margin cut in €550m BUWOG refi

German residential property company the BUWOG Group has negotiated a €550 million refinancing of a 2014 loan with existing lenders Berlin Hyp and Helaba, at a margin of 105 basis points, a 60bps reduction.

The new loan is fully hedged, with no amortisation, and the total debt cost will be 1.5 percent. It is secured on 18,000 German multifamily units in BUWOG’s portfolio, totalling 1.1 million square metres, primarily in the states of Schleswig-Holstein, Lower Saxony and Berlin. Closing is expected in late January 2017.

A spokesman for the company said it had agreed to pay down circa €35 million, to bring the loan-to-value on the new facility to a “pfandbrief-banked level” below 60 percent. He added that this, combined with the company’s track record with the two banks and the reduction in interest rates since 2014, enabled the “very significant reduction” in the margin on the debt.

The two banks are taking an equal participation with Berlin Hyp acting as global coordinator. With good German deals with top sponsors heavily competed for and opportunities scarcer than in 2015, it is thought both plan to hold rather than syndicate the debt.

The capital to reduce the LTV comes from a €300 million convertible bond which BUWOG issued last month.

The company’s average financing cost including the convertible will decline from 1.9 percent to 1.76 percent and its average financing term will be 12.6 years.

Andreas Segal, BUWOG’s CFO and deputy CEO, said: “After having placed the €300 million convertible in September, we are now happy to be able to further unlock value for BUWOG by restructuring senior debt.”

The company said the refinancing would improve recurring ‘funds from operations’, or net cash flow, by €4 million while it would save a further €13.4 million per annum in amortisation payments.

BUWOG invests in and develops multifamily assets, in Germany and Austria. The business was spun off from Austrian property company Immofinanz in 2014 and listed on the German and Austrian stock exchanges in April 2014.