Deutsche Annington agrees multi-billion resi refinancing

German housing group Deutsche Annington Immobilien has signed a preliminary agreement to restructure its multi-billion Grand securitisation vehicle through a EUR 504 mln equity injection from UK private equity firm and major shareholder Terra Firma.

In a statement, Deutsche Annington said shareholders representing around 37% of the notes have backed the five-year refinancing which extends the maturity of the facility to 2018 and involves the payment of EUR 1.24 bn in the first year alone. The German Residential Asset Note Distributor (GRAND) CMBS vehicle was originally created in 2006 with the issue of EUR 5.8 bn of notes.

If successful, the deal - said to be Europe's largest residential refinancing ever - will bring Grand's loan-to-value below the 60% threshold and reduce its outstanding debt to EUR 3.8 bn. Market experts believe the operation will also pave the way for a long-discussed public listing of Deutsche Annington in 2013 or 2014.

The group of noteholders, advised by Rothschild and Freshfields Bruckhaus Deringer, comprises BayernLB, ING Investment Management, JP Morgan, Landesbank Baden-Württemberg, Pimco and Standard Life Investments, which represent around 32% of the Grand notes. Together with the notes held by Deutsche Annington's shareholders, they account for 37% of the total.

Deutsche Annington, advised by Blackstone and Allen & Overy, will repay EUR 700 mln in the second year, EUR 650 mln in each of the third and fourth years and the balance in the fifth year. As part of the agreement, the margin on the Grand notes is to be increased from 48 basis points to 165 basis points.

A court hearing is scheduled later this year when 75% of Deutsche Annington bondholders will be required to pass the proposed refinancing.

'A refinancing on these heads of terms would be positive for the noteholders and our customers. It will enable the group to build upon its successful track record. I am therefore confident that the transaction will be successfully achieved on schedule,' said Wijnand Donkers, CEO of DAIG.