Merlin magics up €825m refinance

Merlin Property has secured the largest real estate loan in Spain since the downturn.

The Socimi has agreed an €825m, 10-year loan from a consortium of 10 banks to refinance a portfolio of 880 BBVA bank branches and five BBVA offices known as the Tree portfolio, according to EuroProperty.

The deal is a landmark in the recovery of the Spanish real estate debt market and allows Merlin to lower its cost of debt, swell its coffers and increase the prospect of it paying a dividend in the coming months.

The consortium of banks is led by CaixaBank, BNP Paribas, Calyon, Santander and Popular with Credit Suisse and Société Générale also part of the club. The portfolio is valued at €1.65bn and the loan reflects an LTV of 50%. The senior loan has a margin of 250 bps.

The cost of the debt has fallen dramatically. When Merlin bought the portfolio at the time of the company’s €1.25bn IPO in June for €739.5m, it put in place an €843m facility for which Deutsche Bank was the lead arranger. Other banks in the syndicate included Barclays Bank, La Caixa, ING, Bawag and Société Générale. It was due to expire in 2017.

The refinance was considered to be a potential CMBS by some investment banks, including Credit Suisse, but Merlin ultimately decided that using existing relationships would be quicker and cheaper.