AgFe wins restructuring role on German Immeo 2 CMBS

Credit adviser proposes extending loan on €1bn German housing CMBS

AgFe has been mandated on a potential restructuring of the loan underlying €1bn German multi-family housing CMBS  Immeo Residential Finance No 2 (Immeo 2).

Credit adviser AgFe, where Natalie Howard is head of real estate, is working for the borrower, Immeo Wohnen. It has put forward a proposal to extend the underlying seven-year loan by 18 months to June 2015 and also requested a reduction in the scheduled amortisation to reflect the reduction in portfolio size.

The restructuring would help the borrower’s business plan to refinance the debt in yearly instalments of about 20% of the residential portfolio. This should optimise its refinancing costs and provide more time, given the constraints in the lending markets and the large volume of upcoming loan maturities in the German multi-family housing market.

Only the class A note holders would receive compensation in this scenario, in the form of a 0.25% consent fee and an extension fee ranging from 0.75% to 2%, subject to how much debt is outstanding in December 2013 and the timing of refinancings achieved. The structure put in place dictates that only the class A note holders need to agree to the changes.

“It comes down to a question of whether the compensation is enough in the long run for the class A note holders to extend the loan,” said one CMBS expert. “If they can convince more than 35% of them, the deal is done. If not, they’ll have to raise it or try a different route. The junior note holders don’t have much of a say.”

In December, the borrower refinanced around €200m with German banks. It is working on stage two, after which it may resume talks with note holders about an extension or pursue alternative proposals. The borrower approached AgFe to help restructure the deal because Howard’s fellow AgFe partner James Wright helped structure the original deal, which was securitised by Morgan Stanley, Citigroup, Société Générale and BNP Paribas.

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