Deutsche Wohnen’s €1.5bn refi to lower interest costs, LTV

Deutsche Wohnen, Germany's second-largest listed residential landlord, will be refinancing €1.5bn of bank debt "We hope to finish the total £1.5bn refinancing by the end of July, but it depends on market conditions," said Deutsche Wohnen's head of investor relations Torsten Klingner. The company will use mixture of bonds, new bank loans and cash to refinance and repay loans that mature mainly in 2018 and 2019.

Deutsche Wohnen smallDeutsche Wohnen, Germany’s second-largest listed residential landlord, will be refinancing €1.5bn of bank debt

“We hope to finish the total £1.5bn refinancing by the end of July, but it depends on market conditions,” said Deutsche Wohnen’s head of investor relations  Torsten Klingner.   The company will use mixture of  bonds, new bank loans and cash to refinance and repay loans that mature mainly in 2018 and 2019.

“It will be our first corporate bond. The intention is to issue €500m, maybe slightly higher, with a 10-year maturity, a plain vanilla bond,” said Klingner. Last November Moody’s gave Deutsche Wohnen a first-time, long-term issuer rating of Baa1.

“The main intention of the bond is to use our financing toolbox to be more flexible.  We are reducing our regular debt repayments so we have more flexibility on cash flow and dividend payments.  On the other hand, it’s a bit more expensive compared to extending our bank loans – maybe 30bps more,” noted Klingner.

Around €700m will be refinanced with new bank loans and €300m of higher-interest bank loans will be repaid in cash. The refinancing — which accounts for some 28% of the company’s total debt – will lower the average interest rate on this chunk  from its current 3.4% to below 2%. It also extends the maturity profile and shrinks the company’s pro-forma LTV to below 45%.

Deutsche Wohnen is currently raising €905m with a new share issue, the bulk of which will be used to fund the €500m purchase of 6,500 units, predominantly located in Berlin. The remainder is earmarked primarily for further acquisitions and the repaying the higher-cost loans.

 

 

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