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Schuldschein
The Schuldscheindarlehen is an instrument widely used by German corporates, thanks to the liquidity of its debt market. Recent issuers in Germany include Lufthansa, Porsche, Salzgitter, Stada, freenet and Nordex.
Germany's first and original REIT, the Hamburg-based Alstria Office REIT AG, has placed its first 'Schuldscheindarlehen', or unsecured promissory note with a total volume of €150m. This is the first time that a listed German real estate company has raised finance with this particular instrument, and it may open the door to other companies also tapping the refinancing markets in this way.
The Schuldscheindarlehen is an instrument widely used by German corporates, thanks to the liquidity of its debt market. Recent issuers in Germany include Lufthansa, Porsche, Salzgitter, Stada, freenet and Nordex. Last year the German market was estimated at a total issuance size of €20bn, with investors being mainly savings and loans banks (Sparkassen), insurers, pension funds and international banks.
Reuters puts the volume of German issuance in this year's first quarter at €7.75bn, just below last year's Q4/2015 at €7.83bn – albeit with only 25 transactions, compared to the previous quarter's 41 transactions. The trend is towards ever-bigger deals, including jumbo deals of more than €500m
The alstria €150m note has a maturity of between 4 and 10 years (average maturity 7.1 years), with the average coupon of the notes amounting to 2.07% p.a. The offer was substantially oversubscribed and was placed with 47 German and international financial institutions. The proceeds from the new debt instrument will be used to refinance existing secured bank debt, said alstria.
According to long-term alstria CEO Olivier Elamine "The achievement of an investment grade rating by S&P in November 2015 opens us a range of new options in the refinancing. It was important for alstria to be able to establish its name not only in the Debt Capital Market, but also in the Schuldschein-Market, in order to further diversify the sources of capital".
Joint lead managers on the issue were BNP Paribas and Helaba.
Meanwhile, alstria recently bought an additional 1.4% of Deutsche Office AG by issuing new shares, bringing its holding in Deutsche Office up to 90.9%. It also announced that Singapore’s sovereign wealth fund GIC had bought a 12.7% stake in the company from US private equity group Oaktree, valuing the stake at just under €250m at the current share price of about €12.30.
With GIC joining the shareholder roster, Oaktree's stake dropped from 25.4% to 13.4%. The Oaktree shareholding came about when alstria took over DO Deutsche Office in October 2015. Alstria now owns and manages 120 offices across Germany, valued at about €3.3bn.
