The Gertner family’s Fordgate Group is to refinance a portfolio of seven offices by issuing bonds secured against the properties.
The industry is increasingly looking towards the capital markets for cheaper financing.
But, rather than borrowing money from an established loan conduit, Fordgate is directly issuing commercial mortgage-backed securities (CMBS) using ABN AMRO as its agent.
David Newby, ABN AMRO’s head of European CMBS, and head of securitisation for UK and Ireland, said this “agency arrangement” with ABN AMRO offers the advantages of a tailormade agreement and cheaper financing costs than an established CMBS loan conduit.
ABN AMRO makes its money through a fee for structuring the transaction.
The proceeds of the £215.65m Quick Star CMBS will be used to repay the senior tranche of a £213.45m bridge loan advanced by ABN AMRO, plus accrued interest of £2.2m.
American lender LNR Property Corporation will provide a junior loan of £22m to Fordgate subsidiary Claywood Holdings to enable it to refinance the balance of the bridge loan.
Claywood will then distribute the loan proceeds from Quick Star and LNR to seven individual property-owning Fordgate companies. Each company owns one property.
ABN AMRO arranged a similar transaction on the Premiertel deal arranged last year for Robert Tchenguiz’s R20 vehicle and on three pan-European transactions arranged for the ProLogis European Real Estate Fund.
Newby said the bank hoped to do a similar $400m (£208m) transaction for a Dutch entity before the year-end and another deal for ProLogis in the New Year.
Credit rating agencies Standard & Poor’s and Fitch have given the £118m senior tranche of the bonds an AAA credit rating.
Newby said: “This transaction is part of a growing trend of borrowers wishing to tap directly into the cheaper financing of the capital markets, which are hungry for paper.”
References: EGi News 06/12/04
