Gagfah, Germany’s largest residential property company, is bringing to market the 43,000-strong Dresden multi-family portfolio for around €1.7bn later this quarter, while expecting to complete the refinancing of a further €2.13bn of maturing CMBS debt by the end of the year, CoStar News understands.
Leonardo & Co, the European investment bank, has been appointed to determine the feasibility of a sale of the Dresden portfolio, owned by Gagfah’s Dresden Woba unit and the €1.04bn debt securitised in two equally split separate CMBS transactions, Lehman Brothers’ Windermere IX and Deutsche Bank’s Deco 14.
Gagfah is looking to trade the Dresden portfolio – also known as the Woba portfolio – at near par, which was last valued at €1.7bn in the first quarter of 2012.
While the sales process is just beginning, interested bidders could include the two unsuccessful finalists for the 23,500-strong BauBeCon portfolio – GSW Immobilien and Apollo Global Management – which Barclays traded to Deutsche Wohnen for €1.235bn six weeks ago, financed by €800m from Deutsche Pfandbriefbank (PBB), LBBW, HSH Nordbank and UniCredit.
Gagfah’s preferred sale option would transfer the refinancing challenge over interested buyers, which would pitch for the portfolio backed with acquisition finance.
The Dresden portfolio comprised 42,688 residential, 1,110 commercial and 8,683 parking units located in the City of Dresden.
Gagfah, which is majority owned US private equity real estate investor Fortress Investment Group, finally settled its 12-month long €1bn legal challenge by the City of Dresden in mid-March, which had prevented progression on resolving the refinancing of the debt.
Depending on the speed of the sales process, bondholders in both Windermere IX and Deco 14 could be repaid ahead of the loan’s 15 May 2013 maturity.
Separately, Gagfah is in advanced discussions with a group of German pfandbrief banks, landesbanks, insurance companies and pension funds to refinance the maturity €2.13bn CMBS debt securing its 78, 630-strong multifamily German Residential Funding portfolio.
Gagfah has divided the portfolio into two broadly even pools, principally by geography, and is in talks with a group of banks, understood to include LBBW, HSH Nordbank, Deutsche Pfandbriefbank, DG Hyp and Landesbank Berlin.
The debt secured by banks is likely to be over five to seven years, while the insurance and direct pension fund debt is expected to be longer, over 10 to 12 years, with increased amoritsation over the life of the loans.
Pricing guidance of the debt is thought to be similar to that which Deutsche Wohnen achieved for the BauBeCon portfolio, which was near 225 basis points over three-month EURIBOR.
In addition, Gagfah is speaking to several insurance companies, thought to include AXA Real Estate, M&G Investments and Allianz, and a number of international pension fund which have direct lending platforms.
The German Residential Funding CMBS is secured by a portfolio is spread throughout Germany with around 60% of the properties located in 20 major cities, with the top five: Berlin, Hamburg, Köln, Bielefeld, Frankfurt and Essen.
The 4.1m sq m sized portfolio delivers €266.04m in annual rental income.
Deutsche Bank and Goldman Sachs jointly underwrote the €2.66bn whole loan in the summer of 2006, which matures on 16 October next year.
Gagfah expects to tie up the refinancing by the end of the year, potentially repaying bondholders early next year.