Aareal Bank clears final debts with SoFFin
The Wiesbaden-based property financing bank Aareal Bank last week repaid the final remaining €300m of the silent participation provided by Germany’s bank bailout fund SoFFin, nearly six months ahead of its contractual repayment date of March 31st 2015.
The conservative Aareal had drawn on support made available by the government in early 2009 to stabilise the financial services sector at the height of the financial crisis. The objective had been to protect Aareal Bank's sustainably profitable business in what was a very difficult market environment at the time. Last year Aareal Bank raised its profit 13% over the previous year.
In addition to the silent participation, which had an original amount of €525 million and accrued interest at 9% p.a, SoFFin had granted a guarantee facility to Aareal Bank for unsecured issues of up to €4 billion. Aareal started its gradual repayment of the silent participation in the summer of 2010, with an initial tranche of €150 million, followed by a further €75 million tranche in 2011. At the end of March 2012, Aareal returned all issuance guarantees, and has paid SoFFin a total of about €237 million to date in interest and guarantee fees.
Meanwhile, Aareal Bank received a strong thumbs-up in the recent ECB’s assessment of German banks in the recent Eurozone bank stress tests. The bank was rated the best positioned of any real estate lender in Germany – assuming marked macroeconomic deterioration, its core capital ratio would decline to 11.8%, more than twice as high as the level held to be necessary by the ECB (5.5%). Hypo Real Estate (10.8%), BayernLB (9.4%), NordLB (8.8%), Helaba (8.2%), Dekabank (8.0%), and Commerzbank (8.0%) also have large buffers. HSH Nordbank (6.1%) and DZ Bank (6.0%) passed by a relatively small margin, while Münchener Hypothenkenbank was the only bank that failed the test (it has since raised additional capital which would haves seen it passing).
Aareal Bank has traditionally had a strong lending exposure to foreign investors, both in Germany and in neighbouring Europe. Earlier last month (October) the bank acted as Joint Lead Arranger with Munich-based pbb Deutsche Pfandbriefbank to underwrite a €515m senior loan facility to the Boston-headquartered Beacon Capital Partners, secured on the Tour First office tower in Paris’s La Défense.
AEW Europe’s Senior European Loan Fund 1, UK asset manager M&G Investments and a third banking partner also participated in the facility. At 231m with 50 floors, Tour First is the tallest office building in France. It underwent a €300m refurbishment between 2008 and 2011, with the height of the tower raised from 155m previously, and 83% of the total lettable area is now leased to international companies including consultants EY and Euler Hermes. Beacon said in 2012 that it planned to keep the tower in its portfolio for between one and three years.
Aareal MD Martin Vest said the refinancing deal allows the bank to pursue the growth of its portfolio in France. “This transaction is a further proof of our strong commitment to France being one of our core markets in Europe,” he said.