Matrix European Real Estate Investment Trust Limited (MEREIT) completed the disposal of its 100% interest in Vienna based IZD Tower on May 4, 2010. The property SPV has been acquired by a joint venture between Signa Recap Development Fund I and a large German insurance group for a price of 212.25 million.
Stephen Miles, Director EMEA Capital Markets, Jones Lang LaSalle said: "This represents one of the largest single asset office transactions in Europe in the last 18 months and demonstrates that there is investor strength and depth for good quality assets, despite macroeconomic conditions that remain challenging across many markets."
The Board of MEREIT (the "Company") is pleased to announce that the sale of the Company's asset in Vienna - the IZD Tower - has completed.
The property is a substantial office tower adjacent to the United Nations in the Donaustadt region of Vienna. The property SPV has been acquired by a joint venture between Signa Recap Development Fund I and a large German insurance group for a headline price of 212.25 million. The sale will have a minor impact on the Company's NAV as compared to the December 31, 2009 position.
The sale releases circa 64.4 million of cash of which 35 million will be utilised in-line with the Lloyds Banking Group ("LBG") refinancing, as follows:
- 14.35 million will be used to pay down senior LBG debt and a further 14.35 million to pay down LBG mezzanine debt.
- 3.30 million will be utilised to further degear LBG debt or to reduce the Company's Cross Currency Swap liability.
- 3.00 million is reserved for the potential buyback of the Company's shares held by LBG.
- A further 5 million is held in escrow against various warranties for 12-months.
- Following the repayment of LBG facilities of 28.7 million, total outstanding debt will be 263.29 million including Mezzanine of 5.11 million. Based on the December 2009 valuation the Senior LTV ratio would be 64.6% following the minimum repayment, below 65% LTV the LBG facilities do not sweep surplus income.
This sale is the latest stage in a package of measures that the Company has been undertaking over the past two years in order to degear and stabilise the portfolio. Following the sales of Münster, Montpellier and IZD, together with the refinancing of the Company's LBG debt, the Company's gearing is now 64.6% LTV, which gives 13.9% headroom on the loan to value covenant test, and there are no loan maturities until 2014. The recent extension of the associated interest rate swaps has benefitted cash flow by reducing the Company's average fixed interest rate to 2.76%.
This places the Company in a strong position to look to the future growth of the Company and the Board is considering the application of surplus IZD proceeds for additional degearing, reinvestment and othe