Gagfah has confirmed its intention launch its third German multi-family CMBS within 12 months refinancing three existing separate CMBS loans in one circa five-year €700m new transaction before next April.
The likely new issuance – yet to be determined as a true sale or agency-style transaction – will be secured by a slimmed down portfolio with a value of around €1.07bn, reflecting a 65% LTV, requiring the pay-down of just under €200m from the €890.1m currently outstanding across the three loans.
The three CMBS loans – the €367.8m WGN loan, the €350.2m WBN loan and the €172.1m loan – are all part of Deutsche Bank’s DECO 2007-E7X securitisation and mature 20 April 2014.
Across the three CMBS loans, the average occupancy rate is 90%.
This leverage point would be consistent with Gagfah’s recent €2.0bn German Residential Funding 2013-1 Limited CMBS, arranged by Goldman Sachs and Bank of America Merrill Lynch.
In Gagfah’s earnings call last week, Gerald Klinck, chief financial officer at Gagfah, told analysts: “We have started to refinance the 2014 maturities.
“The majority of NILEG, which comprises WGN WBN and NILEG Residential, of about €900m, we have started that refinancing as one package.
“With our experience in the CMBS market now, we try to use this refinancing source. Given that the LTVs of these portfolios is comparatively high, we plan to de-lever it by about €200m.
“We have started the process now, offering rating agencies access to the data room and so on. With the experience of GRF and Woba, we expect that we will have the refinancing in place prior to the outstanding maturity in April 14.”
The current pricing of GRF 2013-1 suggests that Gagfah should be able to raise comparable new five-year debt at a 65% LTV for less than 3%, according to estimation by BAML’s CMBS research team.
BAML’s estimation suggests Gagfah should be able to achieve an indicative pricing for the new five-year CMBS issuance of 2.93% – comprised of an indicative debt margin of 1.65%, plus a 1.29% five-year swap rate.
In a research note published on Friday, BAML wrote: “Since the beginning of 2013, the company’s overall interest rate has declined from 4.35% to 3.54% currently, driven largely by refinancing the €1.1bn Woba loan at 3.34% and the €2.0bn GRF facility at 2.76%.
“Refinancing the 2014 maturities (which have a blended interest rate of 5.0%) is likely to cause Gagfah’s interest cost to decline further, in our view.”