Deutsche Annington’s GRAND “Goldilocks” refi deal wins 90% approval

Deutsche Annington has secured take-up of just over 90% of bondholders in the outstanding €4.33bn GRAND CMBS, turning the focus to next year’s ambitious €1bn refinancing target and the Germany’s largest residential company’s public listing.

Yesterday afternoon, Deutsche Annington confirmed that the issuer of its CMBS vehicle would seek approval next Friday in the English High Court to ratify its “scheme of arrangement” refinancing agreement.

The “early bird” offer to lock-up bondholders to the terms set out in July – with an additional 20 basis points one-off fee – expired yesterday afternoon, bringing to an end a four-month lobbying effort by Deutsche Annington, and its adviser Blackstone.

Rothschild devised the refinancing strategy with the Ad-Hoc group of bondholders.

Deutsche Annington’s success in securing such strong sign-up to the largest-ever refinancing deal in European real estate history is a victory of balance – a Goldilocks deal – in which gripes at the various terms over margin step-ups, equity injection, amortisation and refinancing targets were never significant enough for detractors to vote against.

And there has always been significant support in favour.

Assuming no unforeseen legal hiccups, the refinancing agreement will close by the end of the year, with the €504m equity by Terra Firma, Deutsche Annington’s parent company, injected into the structure thereafter to reduce the outstanding current balance to €3.8bn.

Now the focus turns to the first considerable €1bn refinancing target for 2013, which will likely be a combination of German pfandbriefbanks and landesbanks, CoStar News understands.

Newsflow on the initial refinancing lenders can be expected in January, CoStar News understands.

The year after and beyond, more ambitious capital markets strategies will be attempted including a potential ‘mini GRAND’ CMBS – agency-style or true-sale – for the 2014’s €700m, or the €650m refinancing targets of 2015 and 2016.

Terra Firma’s IPO timetable for Deutsche Annington is understood to be next Spring, in currently Europe’s most-coveted real estate IPO mandate among investment banks.

CoStar News wrote an analysis of the GRAND refinancing proposal here.

About CoStar News

Finance Editor, CoStar News
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