An innovative transaction, which will see Belgium Sicafi Cofinimmo double its investment portfolio, could make it easier for the tax transparent vehicles to increase their size.
Cofinimmo is to undertake one of the largest property transactions in Europe this year with the purchase of Primaedis, which has a portfolio of 23 prime properties in Belgium.
This type of large deal would usually be difficult for any Société d’investissement capital fixe en immobilier (Sicafi) because the vehicle is restricted to a 33% gearing. But in an unusual financing arrangement, which involves investment bank Credit Suisse First Boston taking a short-term position in the purchase of Primaedis with Cofinimmo, the gearing restriction has been circumvented.
The deal will see Cofinimmo owning 33% of Primaedis while the remaining 67% will owned by CSFB-controlled company Belgian Office Properties. This allows Cofinimmo to put in its equity in the deal while CSFB provides the debt. CSFB will fund its investment with a €450m bridge facility and mezzanine funding.
Cofinimmo then has an option to purchase the stake held by Belgian Office Properties and to merge with Primaedis. Following the merger, Cofinimmo’s portfolio would have an investment value of €1.6bn. Its assets at the end of 1999 were valued at €880m.
David Rendall, European director of Jones Lang LaSalle, which advised vendor Axa Royale Belge along with Bank Degroof, said: “The market generally recognises that Sicafis need to grow. It is difficult for them to get real volume. This really puts them in the big league.”
Cofinimmo was jointly advised by Bank Brussels Lambert and CSFB.
