Redefine International has made good progress in deploying the GBP122.5m of net proceeds from an equity capital raising completed in October 2012 to restructure existing debt facilities and to make new investments.
Approximately GBP94m of the net proceeds has been invested to date.
The company completed the restructuring of all four VBG assets and the associated financing facilities in October 2012. The restructuring and refinancing resulted in the company owning a 50 per cent interest in the VBG assets together with Menora Mivtachim, a major Israeli pension fund, via a newly established joint venture company.
The gross acquisition cost (inclusive of transaction costs) of approximately EUR84.9m was partly funded by the joint venture company with a new five year EUR57m non-recourse debt facility secured from a German bank, with both joint venture partners injecting EUR14m (GBP11.7m) for their 50 per cent interests. The new debt facility was secured at an all-in rate of 2.8 per cent p.a. resulting in an initial yield on equity in excess of 19.0 per cent on the group’s investment.
“The period under review has been transformative for the company,” says Greg Clarke (pictured), chairman of Redefine International. “The successful capital raising in October has enabled the company to address many of our legacy debt issues and simultaneously move the company into a more proactive acquisition phase which will lay the foundations for the future delivery of shareholder value.”
The VBG portfolio comprises four individual German office properties situated in Berlin, Dresden, Cologne and Stuttgart, all of which are currently let to a German government-backed social insurance body. The leases have current unexpired terms of between 7.2 years and 12.1 years and are indexed to 100 per cent of German CPI. The VBG portfolio has a rent roll of EUR7.6m p.a.
In December 2012, Redefine International announced the acquisition of a newly developed retail property in Hückelhoven, Germany. The property was acquired through the group’s jointly controlled entity RI Menora German Holdings and represents the fourth acquisition in joint venture with the Menora Mivtachim Group.
RI Menora acquired the shares in the property owning company, ITB FMZ Hückelhoven, for EUR4.2m (including acquisition costs). The property has a value of EUR11.6m and has a non-recourse senior debt facility of EUR7.9m secured against it from Bayerische Landesbank. The senior debt facility has a term of five years and bears interest at a rate of 1.5 per cent above Euribor. An interest rate fix is currently being negotiated.