CTP’s €1.9 bn refinancing of its €2.5 bn Czech industrial portfolio which closed in June will simplify its loan administration and help position the company for a plan to double its portfolio to 10 million m2.
The new, single facility, underwritten by three relationship banks, was one of the most complex debt deals carried out in Europe in recent years and the largest transaction in CEE for some time.
CTP’s chief financial officer Richard Wilkinson says the new facility replaced 40 separate loans structured in 40 different SPV agreements, secured on 2.7 million m2 across 200 properties with 500 lease agreements.
‘It wasn’t the idea that is complex; it is the sheer scale’, he tells PropertyEU. Consolidating the loan agreements into one syndicated loan, he adds, meant CTP can streamline loan administration and processing while benefiting from secure funding for the portfolio over the medium term. ‘It will massively simplify our lives.’
The seven-year facility provides €1.6 bn secured on CTP’s entire Czech industrial properties, which are valued at €2.5 bn, a loan to value of 65%. ‘An important part for us’, he continues, is that the entire €1.9 bn package also provides €270 mln of development finance, enabling the company to carry out ‘more than 30’ projects in the coming 18 months without having to go back to the debt market for more capital.
Wilkinson says the blended pricing was ‘lower than the average of our previous finance’.
CTP, owned by Dutch entrepreneur Remon Vos, is a long-term investor holding the assets which it develops, which means that both tenants and lenders will benefit from stable and secure funding, Wilkinson believes.
The three banking groups are: Austrian bank Erste Group and its local subsidiary Ceská sporitelna; Société Générale with its Komercní banka; and Uni-credit with UniCredit Bank Czech Republic and Slovakia.
New benchmark for CEE
Société Générale’s Jean-Pierre Cberbit says the deal ‘sets a new standard for financing in Central & Eastern Europe.’
Wilkinson says no bank was prepared to underwrite the entire deal alone. He says the underwriting consortium is in the process of syndicating ‘about half’ the loan, with other CTP relationship lenders expected to participate including one German insurance company. This is thought to be Allianz, which provided €100 mln to CTP in 2017, at the time its first debt investment in the Czech Republic.
CTP’s 2.7 million m2 of Czech assets makes the country the largest market in the company’s total 5 million m2 portfolio. The industrial and logistics specialist also invests in five other CEE countries: Romania (its second largest market, with 1 million m2 of assets); followed by Hungary, third; then Slovakia, Poland and Serbia.
The company intends to continue expanding in all six markets ‘in line with tenant demand’, Wilkinson says, but has an in-house target of getting to 10 million m2 and is growing at a rate of 15% a year. ‘We don’t want to do that with just equity.’
Eastdil Secured was CTP’s financial adviser to source and structure the finance. Wilkinson emphasises: ‘The deal was super-complex and we felt it was useful for us to hire an adviser with experience of these types of transactions to help us.
‘You are talking about maintaining multiple parallel discussions with banks and Eastdil has regular contact with most of the lenders. They also successfully generate competitive tension to get the best pricing and the best structure.’
Eastdil, he thinks, ‘has carved a niche’ in Europe for advising on large and complex debt financings. While CBRE and JLL are also developing debt brokerage businesses, they value for CTP which ruled them out of consideration for this transaction. Eastdil’s core business is purely investment and debt sales and advice.
The next significant financing occupying Wilkinson’s team will be of the group’s portfolio in Hungary, although he points out, ‘that one is much smaller!’.