Cairn Capital closes €237.5m Pangaea Funding Greek structured bond

NBG Pangaea, the largest Greek real estate investment company, has priced a five-year €237.5m commercial mortgage-backed floating rate note to finance an unleveraged 77-strong portfolio of predominantly National Bank of Greece (NBG) bank branches throughout the country.

cairn capital logoCairn Capital, the credit asset management and advisory firm, closed the single tranche unrated issuance, named Pangaea Funding 1 PLC, on Friday, priced at 485 basis points over three-month Euribor.

However, Pangaea Funding 1 notes were issued at a 1.09% discount, which implies an aggregate margin of 5.07%. The underlying property portfolio is valued at €476.36m, according to independent valuer Mara N. Vlachogianni, which reflects a 49.8% LTV.

The buyer of the €237.5m notes was a global fixed income fund manager which is believed to be PIMCO, CoStar News understands.

The five-year notes have a seven-year tail period before legal final maturity of July 2026.

On which basis, future improvements in cashflow over the next 10 years is estimated to increase the annual passing rent to €59.76m and the exit valuation of this portfolio – if its remains intact – to €548.35m.  This would reflect an exit yield of 9.01%.

Within the 228,761 sq m Greek portfolio, 39 properties are in Attica and a further five in Thessaloniki, with the balance, inter alia, in cities and towns such as Thessaloniki, Heraklion and Patra.

The NBG Group leases contain guaranteed tenancy provisions whereby the tenant agrees not to terminate the lease for between 15 and 25 years, accounting for 99.8% the €43.82m annualised passing rent of the portfolio over 89 leases.

NBG Pangaea, which is 66% owned by Invel Real Estate Partners and 34% by NBG, will use the net proceeds to finance its future investment programme.

NBG Pangaea has an investment pipeline of €500m, of which around €350m worth of deals are expected to close by the end of September, which would take the real estate investment company’s portfolio to around 350 assets worth more than €1.6bn.

The NBG Pangaea portfolio is approximately 90% assets in Greece and 10% assets in Italy.

The 77 assets refinanced through Pangaea Funding 1 PLC is the company’s only asset level financing, with NBG Pangaea expected to secure future asset-level financings – either through a tap issue, a separate structured bond, term financing or a revolving credit facility in due course.

Invel, the European opportunistic real estate investor, acquired two-thirds of NBG Pangaea REIC at the turn of the year for €653m, financed with a €420m vendor finance package at the corporate level in a longer than 10-year senior loan.

Invel sold down the majority of its near €235m equity stake, with York Capital Management, the global investment management firm, acquiring €125m with the balance acquired by a trust representing a Middle Eastern family office and Invel senior management.

About CoStar News

Finance Editor, CoStar News
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