Cerberus Capital Management has agreed to buy the 22,000-strong portfolio of German residential property from the receiver to Speymill Deutsche Immobilien, it announced today.
Reports first surfaced of talks between New York-based Cerberus and receiver Ernst & Young plus Speymill’s lenders last month when the Financial Times Deutschland and Bloomberg suggested the transaction size was $1.18 billion. The transaction is expected to close later this week.
In an announcement this morning, Cerberus said it had entered into a definitive agreement to acquire the assets of the “distressed company”. As a key part of this transaction, Cerberus added it worked with Speymill’s bank lenders to recapitalise the assets through a restructuring of the company’s €985 million of distressed bank loans, and the injection of capital in the form of subordinated debt and equity that will be used primarily to pay down debt and make improvements to the assets.
Lee Millstein, senior managing director at Cerberus, said: “The banks benefit from this transaction by having a large portfolio of non-performing loans converted to performing loans, while stakeholders benefit from Cerberus injecting new capital for improvements and leading the execution of a turn-around of the assets.”
The lenders are a consortium of banks led by Netherlands-based NIBC Bank along with German banks HSH Nordbank and Norddeutsche Landesbank.
Ben Cairns, receiver at Ernst & Young called it a “landmark recapitalisation” and a distressed loan restructuring of “mutual benefit” to the existing banks, “stakeholders of the acquired assets”, and the new capital sponsor, Cerberus. Corpus Sireo has been hired to asset manage the properties.
Speymill is a company that was formed in March 2006 and went onto to float on London’s junior stock market, AIM. However it was delisted in May 2011 when it ran into trouble. At the time, it said advisor Citigroup Global Markets was “seeking permanent solution to the issues confronting the company's debt and capital structure”. An initial restructuring proposal was submitted to the banks forming the consortium in early April for a fresh capital injection from new investors.
The deal underlines how Germany has been a happy hunting ground for Cerberus. It has been an active investor in the country since 2002. Along with Goldman Sachs’ Whitehall funds it launched Germany’s largest initial public offering (IPO) of 2011 with the successful listing of Berlin-based GSW Immobilien on the Frankfurt Stock Exchange in April of last year. GSW was acquired from the State of Berlin in 2004, and Cerberus led the restructuring of the company and improvement of the assets