Banks and institutions team up on €620m property refinancing

Banking groups Natixis and BNP Paribas Corporate Finance have brought together institutional investors for a rare form of refinancing in the French property sector.

Natixis participated as lead arranger for the €620 mln refinancing of the 7,500-unit Selec residential portfolio.

BNP Paribas Corporate Finance acted as placement agent for the fund, bringing together some of the institutional investors for the transaction.

The Selec portfolio, originally composed of 10,200 homes let to energy group EDF on a 12-year lease, was acquired by LBO France in 2006 in a joint venture with RREEF.

The lease with EDF was renewed in 2010 for another 12-year period, renewable again after 12 years. Over 25% of the units have been sold since 2006, with around 7,500 remaining. Proceeds from the sales helped deleverage the portfolio, which, at acquisition, was financed with €960 mln of debt.

The new financing is structured in two tranches. The first tranche of €420 mln has a variable rate and the second of €200 mln has a fixed rate (bullet loan). The loan has a 5-year maturity term. The financing was subscribed directly (40%) and through a securitization fund (60%) structured specifically for this operation and grouping together institutional investors.

Thierry Bernard, head of real estate finance at Natixis, commented: 'It is rare, in France, that banks and institutional investors work together in such close coordination on a real estate refinancing operation. With its innovative structure, this operation has made it possible for institutional investors to take part in the loan syndication, whereas, up until now, they have mainly been present on the debt market via bond issuances, which de facto exclude the banking world.'

The lenders were advised by Etude Rochelois (Muriel Mignard) and GGSM (Jean-Maurice Gaillard). The securitised fund was advised by Gide (Xavier de Kergommeaux).

The borrower was advised by Wragge & Co (Pierre-Emmanuel Chevalier), Etude Monassier & Associates (Sylvie Burthe-Mique) and Etude Lazaygues & Associates (Didier Lasaygues).

LBO France is an independent private equity fund manager with €4 bn under management.