Debt arranger to a European real estate investment group for their acquisition of a portfolio of 34 bank branches in Spain.
The client sought to acquire a portfolio of 34 bank branches, geographically spread across Spain and let to Bankia (sub-investment grade covenant at the time, BB+/BB by Fitch/S&P), with a remaining term of 20 years. Spanish banks had retreated from lending into the market due to the global financial crisis and but were slowly re-entering. International lenders lending in Spain were not typically keen on the granular nature of the portfolio, having identified a general over-supply of bank branches in Spain (highest in Europe by reference to the population), and the client was seeking a highly competitive cost of financing to support the acquisition bid.
- We undertook a ‘deep dive’ of the equity and credit story of the single tenant, Bankia, given the sub-investment grade credit rating, plus the tenant’s own intention to substantially reduce the number of bank branches it operates over time (with no public visibility).
- We identified all potential lenders within two weeks and met with the key lenders in person during that period. We also created significant competitive tension with domestic and international lenders and ultimately achieved a very low cost of funds, significantly below 200bps p.a.
- We negotiated low prepayment penalties to facilitate the client’s business plan & allow optionality to dispose of assets in the short-term.
- Managed the entire acquisition and debt arranging process for the client including due diligence providers, valuers (both ‘RICS’ market-valuer and ECO valuers prescribed by the central bank of Spain) and legal advisers.