Redefine refinances German retail portfolio with €83m loan

UK REIT Redefine International has completed the first part of a refinancing deal for a €156.8 mln German retail property portfolio acquired in a joint venture with Redefine Properties.

The joint venture has secured a €83.15 mln facility from Berlin Hyp and has initially drawn down €64.93 mln. Total loan break costs of €10.5 mln were settled as part of the initial drawdown.

At the same time the company has reached an agreement with Redefine Properties to sell 12 German retail properties to the joint venture with a total value of €16.89 mln, made up of discount retail and mixed use centres.

The loan facility has a margin of 1.20% and an all-in interest rate of 1.58%, assuming the current five year Euro swap rate. The loan has no amortisation and matures in May 2020.

Redefine International will be funding its 50% equity contribution required to complete the refinancing through the disposal of the properties and by injecting €9.15 mln in cash.

In January the company announced its purchase of the portfolio of 56 German retail properties in a 50-50 joint venture with its largest shareholder, Redefine Properties, at a net initial yield of 7.5%. Redefine Properties holds a 30% stake in Redefine International.

The portfolio comprises over 128,000 m2 of lettable area including a mix of stand-alone supermarkets, foodstore-anchored retail parks and cash-and-carry stores under the Edeka, Netto, Rossmann and Real brands. Around 85% of the total annual rental income of €12.6 mln is generated by assets in western Germany and Berlin. The assets have an occupancy rate of 99.2% and a weighted average unexpired lease term of 10.3 years.

With a market cap of around £650 mln (€840 mln) and a £1 bn portfolio, Redefine International is listed in London and Johannesburg, and counts institutional investors such as AXA, M&G and Henderson Global Investors among its shareholders.