Growing appetite for multi-family housing proves a boon to GAGFAH

German property company to increase size of its next CMBS to €1bn following success of Taurus

GAGFAH is benefitting from the market’s current enthusiasm for German multi-family housing and is increasing the size of its next CMBS to €1bn.

It will follow its first CMBS since the financial crisis, the €1.07bn Taurus 2013, backed by its Dresden portfolio, which proved a hot ticket this month. The company says it is well on track to refinance the full additional €2bn of debt in its German Residential Funding CMBS maturing this August on improved terms.

As Real Estate Capital reported last month, the plan was to divide the new GRF debt into six pools, of which five would be provided by a mix of German and international banks and insurance companies. The sixth, a €700m CMBS, would be placed by Goldman Sachs and Unicredit.

But given the increased investor demand and better pricing that German multi-family CMBS is currently commanding, GAGFAH has decided to cut the number of debt pools to four, upping the size of the CMBS issue.

The company says this will lower execution risk and give it better terms. It expects to be paying an overall interest rate of 3-3.5% for a maturity of five to 10 years on its new debt. In addition, the company has agreed a lower margin on the new WOBA loan provided by Bank of America Merrill Lynch in February.

The original loan was €1.06bn, but after closing this was increased by €17m to £1.077m in exchange for reducing the coupon from 3.85% to 3.34%. GAGFAH estimates the 51bps reduction will save it around €4.4m pa of interest.

“This puts the company in a great position and enables us to refocus on our core business and prepare GAGFAH for the next phase,” explained chief executive Thomas Zinnöcker.

Meanwhile, Deutsche Bank is mulling a securitisation, private placement or a loan syndication of the £400m, four-year senior loan it has just provided to refinance Blackstone’s Chiswick Park in west London.

The loan-to-value ratio is in the low-to mid-50s. For the whole loan, it is about 80%, with Apollo Global Management providing £200m of four-year mezzanine finance. “There was a lot of demand to provide the mezzanine,” said a source that worked on the deal.

The new debt repays the outstanding £293.54m DECO 2011-CSPK CMBS, put together by Deutsche Bank. It also repays GIC Real Estate’s £61m junior loan and Lloyds Banking Group’s £53m development loan for Building 6. It gives Blackstone an additional £225m on the previous financing.