Deutsche Mittelstand Real Estate has placed a further €130 mln of an unsecured corporate bond originally issued in July 2017.
The five-year bond bears an interest rate of 2.875 % per annum and was issued at a price of 101.25% its value.
The company said it will use the net proceeds from the issue to refinance outstanding liabilities of Germavest S.à.r.l., an indirect subsidiary of Demire, in the amount of €94 mln at a current average interest rate of 4.4 % per annnum, as well as for general corporate purposes, including the financing of future acquisitions.
Deutsche Bank and Morgan Stanley are acting as joint global coordinators in the transaction.
With the completion of the planned refinancing of existing liabilities by the end of the year, the company's annual financing costs will decrease from 4.1 % per annum as of the 30 June 2017 reporting date to 3.0 % on a proforma basis. This should result in an annual increase in FFO of €6.6 mln, the company said.
'By recently tapping our corporate bond, which was successfully placed on the international capital market in July 2017, we have reached a key milestone on the road to increasing the profitability of the Demire Group. We are repaying all of our expensive and complex financing of the past and, at the same time, achieving a significant increase in our FFO and cash flows starting in 2018 as a result of considerably lower interest rates and savings on repayments,' said Ralf Kind, CFO of the Demire Group.
