Godewind lowers financing costs, targets €3m in office assets

German listed office specialist Godewind Immobilien said it had concluded a new €82m refinancing package for three assets in its portfolio, significantly lowering its debt servicing costs.

The loan from DZ Hyp will refinance the ComConCenter properties in Frankfurt, the Airport Business Centre in Düsseldorf and Pentahof in Hamburg, which were acquired for a total purchase price of €142.4m, over a five-year term at an interest rate of 1.09%.

The financing agreement overrides a previous 1.87% interest rate, allowing Godewind to bring down the average cost of borrowing across its portfolio to about 1.5%.

Godewind raised €375m when it listed publicly on the Frankfurt Stock Exchange in April 2018, at a launch price of €4.00. Since then it has bought the Frankfurt Airport Centre, a 48,140 sqm office complex, from Madison International Realty and Peakside Capital for €168m at a gross initial yield of around 5.5%, and an office building in Kirchheim, near Munich, for €30.5m.

Both properties have relatively high vacancy rates – 63% in the case of the Munich property – which Godewind stresses underpins its strategy of adding value by sourcing new tenants for empty office buildings.

Godewind said the new financing deal will soon be followed by further refinancing on assets Quartier am Zeughaus in Hamburg, Herzog-Terrassen in Dusseldorf, Y2 in Frankfurt (these last three all bought from OfficeFirst), and Sunsquare and Eight Dornach in Greater Munich.

The company says its portfolio has an overall vacancy rate of 28% at acquisition, giving it ‘significant potential for organic value appreciation’. With assets under management of currently €740m, Godewind has set a target of expanding its total real estate assets to €3bn in over the next two years.

The company is led by well-known German real estate entrepreneur Stavros Efremidis (formerly of WCM), backed up by investor Karl Ehlerding. After the IPO last year, the share price languished – largely due to the lack of any notable acquisitions. It’s been showing renewed signs of life recently, which could improve further if the company manages to sign some new lease agreements to lower those high vacancy rates.