Cerberus seals EUR 1b Speymill resi deal

US private equity group Cerberus has entered into a definitive agreement to acquire Speymill’s distressed portfolio of some 20,000 German residential units from its receivers.

As part of the transaction, Cerberus worked with the company's bank lenders to recapitalise the assets through a restructuring of the company's EUR 985 mln of distressed bank loans. It also injected capital in the form of subordinated debt and equity that will be used primarily to pay down debt and make improvements to the assets. The transaction is expected to close later this week.

The lenders are a consortium of banks led by Netherlands-based NIBC Bank along with German banks HSH Nordbank and Norddeutsche Landesbank.

Speymill Deutsche Immobilien filed for bankruptcy 18 months ago. Since then, its residential units have sparked a lot of interest among both private equity groups and German property firms. The first rounds of bids are believed to have been submitted last November.

'This is a landmark recapitalisation and distressed loan restructuring which is to the mutual benefit of the existing banks, stakeholders of the acquired assets, and the new capital sponsor, Cerberus,' said Ernst & Young receiver Ben Cairns.

Cerberus has been an active investor in Germany since 2002. Cerberus, along with co-investor Goldman Sachs, launched Germany's largest initial public offering (IPO) of 2011 with the 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.

Lee Millstein, senior managing director at Cerberus, added: '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 turnaround of the assets.'

Corpus Sireo was engaged to coordinate asset management. Engel & Völkers has been retained to market individual assets to private investors in Germany after capital and operational improvements have been implemented. Kuna & Co. KG served as Cerberus' financial adviser on the transaction. Freshfields Bruckhaus Deringer provided legal counsel to Cerberus.