Deutsche Annington has started talks with a number of banks to refinance a €5bn securitised loan.
The talks, which began about seven weeks ago, focus on refinancing a €1bn slice of the loan taken out in 2006 to buy residential portfolio Viterra.
“The refinancing is in tranches,” said a person familiar with the situation. “[The first tranche] is close to €1bn, but it is a moving target. Negotiations are still taking place.”
Separately, a London-based property banker said it was mainly German banks talking to Deutsche Annington.
The original €5.8bn securitisation, called German Residential Asset Note Distributor, matures in July 2013. It was the biggest in the history of European CMBS. Terra Firma, the owner of Deutsche Annington, took out the loan to buy Viterra for €7bn in August 2005 from energy giant e.on. Terra Firma put in €1bn of equity. The loan was secured against 165,000 residential units in Germany.
Last April, Moody’s downgraded the bonds of the securitisation, citing a drop in values for multi-family homes and banks’ reluctance to refinance.
The rating agency also said that sales of residential units, part of Deutsche Annington’s strategy, were lower than expected, while the vacancy rate was higher than expected. Since closing, Deutsche Annington had amortised around €800m through the sale of residential units and the amortisation of REF notes.
The talks come after the successful refinancing of a €890m securitised loan by German residential company GSW in January. The owners of GSW, Goldman Sachs’ Whitehall funds and Cerberus, are trying to list the company for the second time after they were forced to pull it last year owing to the sovereign debt crisis.
Six German banks refinanced GSW, with Deutsche Pfandbriefbank taking the biggest part, stumping up €215m.
There is €13.1bn of multi-family backed debt involving transactions larger than €1bn in the market that needs refinancing over the coming years.
