Johannesburg - Redefine International (RIN)‚ the diversified
income focused property company‚ has agreed terms to restructure all four VBG
assets and the associated financing facilities.
This will result in the company owning a 50% interest in the
VBG assets together with a major pension fund as its joint venture partner‚ it
said on Friday.
As part of the restructuring‚ Redefine has agreed to sell‚
for a nominal amount‚ 50% of its interest in the VBG holding company to a major
The VBG assets comprise four individual office properties
situated in Berlin‚ Dresden‚ Cologne and Stuttgart in Germany‚ all of which are
currently let to a German government-backed social insurance body.
This newly established joint venture company‚ together with
certain of its subsidiaries‚ has reached agreement with the servicer of the VBG
facilities to dispose of the VBG assets to new subsidiary companies within the
joint venture vehicle. The proceeds from the disposal of approximately €80.0m
will be used to settle the original VBG facilities in full. The facilities have
a current outstanding balance of €117.3m.
The gross acquisition cost of approximately €84.9m will be
partly funded by the joint venture company with a new five year €57m debt
facility secured from a German bank‚ with both joint venture partners injecting
€14m for their 50% interests.
The new debt facility has been secured at a margin of 1.72%
p.a. which‚ together with current five year swap rates‚ provides an indicative
all in rate of 2.8% p.a. This will result in an initial yield on equity in
excess of 19% on the group´s investment.
The restructuring process is expected to complete shortly
after the company´s financial year end on 31 August 2012.
The leases have unexpired terms of between 7.8 years and
12.6 years and are indexed to 100% of German CPI. The VBG portfolio has a
current rent roll of €7.6m p.a.
Redefine has now restructured or repaid €139.9m of legacy
financing facilities since its interim results‚ significantly reducing both
leverage and near term refinancing requirements.
"The restructuring of the VBG portfolio is another
significant milestone in successfully implementing the company's strategy of
reducing the Group's leverage and exposure to short term debt maturities. The
establishment of a joint venture with a major pension fund also secures an
alternative source of funding and the ability to capitalise on market
opportunities‚" said Greg Clarke‚ Chairman of Redefine International.