GSW looks to refinance €900m after failed IPO

News

Mike Phillips

24 July 2010

The firm has appointed debt specialists Cairn Capital to advise on the possibility of restructuring or refinancing the debt, which is split across two securitised debt vehicles (see box).

Berlin-based GSW is one of Europe’s largest residential property companies, and owns more than 50,000 apartments in multi-family blocks, primarily in Berlin. The €900m of debt matures in August next year.

Sources close to the negotiations indicated that it wanted to open discussions with bondholders and potential lenders as early as possible because of huge amounts of debt secured against similar residential assets that mature over the next few years.

A further €9.8bn of debt secured against multi-family housing matures before 2013, according to rating agency Fitch. It is understood that GSW does not want to compete with other firms for the limited amount of debt available.

GSW could look to extend the maturity of the existing loans, or try to bring in a large consortium of lenders to refinance the loans in the senior debt market.

According to Fitch, the value of the properties secured against the loans has fallen, meaning that the loans could be in breach of covenant. However, low interest rates and the high occupancy rate of the portfolio of properties means that GSW’s cash flow is very strong, which will aid the firm’s negotiations.

In May, GSW’s owners, the Whitehall property funds managed by Goldman Sachs and funds managed by fellow private equity firm Cerberus, attempted to raise €456m through an initial public offering of shares in GSW on the Frankfurt Stock Exchange, in what would have been the largest European property flotation since before the downturn.

However, the Sovereign debt crisis caused by the problems in Greece and Portugal knocked investor confidence and the IPO was pulled.

Cairn, whose real estate practice is headed by David Henriques, has been involved in many of the largest successful debt restructurings completed so far during the downturn.

GSW Immobilien, the German residential giant owned by Goldman Sachs and Cerberus, is looking to refinance its €900m (£757.5m) debt load after pulling out of a stock market flotation earlier this year. The firm has appointed debt specialists Cairn Capital to advise on the possibility of restructuring or refinancing the debt, which is split across two securitised debt vehicles (see box). Berlin-based GSW is one of Europe’s largest residential property companies, and owns more than 50,000 apartments in multi-family blocks, primarily in Berlin. The €900m of debt matures in August next year. Sources close to the negotiations indicated that it wanted to open discussions with bondholders and potential lenders as early as possible because of huge amounts of debt secured against similar residential assets that mature over the next few years. A further €9.8bn of debt secured against multi-family housing matures before 2013, according to rating agency Fitch. It is understood that GSW does not want to compete with other firms for the limited amount of debt available. GSW could look to extend the maturity of the existing loans, or try to bring in a large consortium of lenders to refinance the loans in the senior debt market. According to Fitch, the value of the properties secured against the loans has fallen, meaning that the loans could be in breach of covenant. However, low interest rates and the high occupancy rate of the portfolio of properties means that GSW’s cash flow is very strong, which will aid the firm’s negotiations. In May, GSW’s owners, the Whitehall property funds managed by Goldman Sachs and funds managed by fellow private equity firm Cerberus, attempted to raise €456m through an initial public offering of shares in GSW on the Frankfurt Stock Exchange, in what would have been the largest European property flotation since before the downturn. However, the Sovereign debt crisis caused by the problems in Greece and Portugal knocked investor confidence and the IPO was pulled. Cairn, whose real estate practice is headed by David Henriques, has been involved in many of the largest successful debt restructurings completed so far during the downturn.