Alstria REIT €540m refinancing coup slashes cost of debt

Hamburg-based Alstria Office REIT has scored a significant coup in refinancing a €544m syndicated loan, which sees it lowering its interest rate, boosting projected cash flow and reducing its overall debt maturity profile.

The new loan was arranged by UniCredit Bank and underwritten by UniCredit Bank itself together with Berlin-Hannoversche Hypothekenbank, HSH Nordbank and Helaba Landesbank Hessen-Thüringen. The loan replaces the previous facility, which was due to mature on July 20th, 2015. The refinancing deal will cut alstria’s cost of debt on its main credit facility starting mid-2015 to about 3.7% from 4.3% today. The existing hedges maturing in mid-2015 will not be terminated, and therefore the full benefit of the lower interest rate will kick in by mid-2015, said the company.

Alstria said the early refinancing allowed it to benefit from the attractive financing environment and significantly improve its overall debt maturity profile. Including the convertible bond issued in June 2013, Alstria’s average debt maturity more than doubles from 2.5 years to 5.6 years, while the company’s long-term lease profile with its tenants is 6.7 years. With the new syndicated loan in place, Alstria now has no major refinancing needs until mid-2018.

Alstria has been one of the most consistent German re-financiers since the onset of the crisis, although as Germany’s first REIT it has always had extra pressure to comply with pre-imposed debt-equity ratios. CEO Olivier Elamine commented on his latest big refinancing: “With an average of 5.6 years our debt maturity is in line with our average lease length and therefore provides one of the most reliable cash flow profiles in the European real estate scene… The early and long-term refinancing underlines the confidence of Alstria’s banking partners in the quality of our business model.”