DIC Asset refinances nearly €1bn with three German banks

In another giant refinancing deal, the Frankfurt-listed DIC Asset AG has been granted a loan of €960m from Deutsche Hypothekenbank, Berlin Hyp and HSH Nordbank, which it will used to prematurely replace nearly all its outstanding loans on its commercial portfolio.

The new loan, with an overall term of seven years, will be used to prematurely repay the existing financing arrangements signed with several banks. The arrangement was underwritten by Deutsche Hypothekenbank (€510m) as joint lead manager as well as by Berlin Hyp (€250m) and HSH Nordbank (€200m). For the Hannover-based Deutsche Hypo, the deal represents the largest loan the bank has ever made – so not surprisingly, it plans to syndicate part of the loan to other banking partners.

According to Sonja Wärntges, the CFO at DIC Asset, "This financial transaction, which is quite significant for us, significantly strengthens our future profitability and the cash flow from our commercial real estate portfolio. The new financing structure and the funds it releases will enable us to expand the company's planned growth and to accelerate it further in 2017."  

DIC Asset noted that the new arrangement lowers the interest rate on the commercial portfolio's bank loans to around 1.7%, a drop of 170 basis points compared to the previous financing conditions. The amortisation rate falls from around 3% to 1% p.a, putting DIC in a very favourable financing position compared to most of its German peers.

The existing financing arrangements are expected to be almost entirely repaid in January 2017, and there will be certain one-off penalties associated with the early repayment of about €60m, leading to a consolidated loss after tax of €35m for the full year 2016. The company assures in a statement that this will not affect the planned dividend payout, on a par with previous years, as the refinancing should increase cash flow by about €40m in 2017.