German multi-family

Our client asked us to refinance ~1,500 residential flats in Berlin with a value of €160m and outstanding finance of €115m.

The challenge was the sponsor’s business model – while very successful it is different from most other investors (these in the main are acquired as portfolio purchases for medium/long term yield and capital growth) whereas our client’s model was to acquire buildings on a case by case basis and sell individual flats as and when they became vacant.

The portfolio was generally under-rented and as it was not in the sponsor’s business plan to refurbish the flats; allowing them to be marketed at very competitive sales prices and ensuring liquidity.

As a result the direct yield was relatively low for this type of portfolio and in many financing scenarios the debt service would be dependant on unit-sales. Thus it wasn’t possible to get the usual low-cost local banks to offer finance. WCL was able to get terms from a large European Bank and a large US non-bank lender in a senior/junior structure, which gave the sponsor the flexibility he was looking for including both the debt quantity and an equity release.