In partnership with Bank of America Merrill Lynch, IVG Immobilien AG has concluded full refinancing for its reference property THE SQUAIRE at Frankfurt Airport. The new loan has a total volume of around €470 million and a term of 5 years. Bank of America Merrill Lynch is acting as the sole contractual partner.
The sale process for THE SQUAIRE initiated in parallel with the refinancing negotiations has been terminated.
“The offers we received did not match our valuation of this property”, explained Ralf Jung, CEO of IVG Immobilien AG. “At the same time, the refinancing obtained makes it commercially attractive for us to keep THE SQUAIRE in our portfolio.
It shows a commercial viability well above total portfolio’s average”. IVG Immobilien AG approached several potential international buyers last September. In December, three of them were given the opportunity to firm up and revise their initial offers. However, the company’s management felt that the results were less favourable than the option it has now chosen.
“The refinancing terms ensure that, with its current letting levels, THE SQUAIRE will deliver an earnings contribution in the double-digit millions”, explained Fabian John, Head of Corporate Finance at IVG Immobilien AG, who is responsible for structuring and negotiating the loan. Now that the financing agreement for THE SQUAIRE has been successfully concluded, restructuring of the liabilities side of the company’s balance sheet is almost complete, said John.
The management successfully negotiated the extensive refinancing of the company’s remaining liabilities to banks back in early October. To this end, two new loan agreements with a total volume of around €1.5 billion were concluded with Deutsche Bank. A tranche of around €680 million was then securitised by the bank as part of a CMBS transaction. This was the first issue in Germany to be secured by commercial property and placed on the market since the start of the financial crisis.
In the refinancing negotiations for THE SQUAIRE, IVG Immobilien AG was supported by Clifford Chance as its legal advisor and Rothschild as its financial advisor.