Capital raise for Czech national against commercial property

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THE SCENARIO

A case recently came to me through an introducer in the South of France who knew of Enness’ prominence in the mortgage market. The client was a Czech Republic national with an extensive global commercial property portfolio, who wanted to refinance a shopping mall in Germany to capital raise.

The German shopping mall in question was worth €35million and already had a €10million loan against it from a small local bank, and wanted to borrow an additional mortgage of €20million. This new loan would refinance the first charge of €10million against the mall, with an additional €10million to raise capital for further investment into the property.

My client had approached his original lender to secure the refinance, however the small bank did not have the appetite to lend and were put off by the fact my client wanted to borrow another €10million at such a high loan to value (LTV).

When I reviewed the case I could see why the local German bank were apprehensive due to certain issues. The mall itself was in a quiet area in the south of Germany, meaning footfall was not as you would usually expect for a large shopping centre. In addition to this, the companies that occupied the units within the mall were not popular retail brands.

In order to overcome these issues, I approached an award-winning lender with whom we have a very strong relationship with. This private real estate fund was willing to lend to my client as they could see the assets were strong, whereas German banks were simply not interested due to the location.

The real estate fund I approached liked to see a good yield, where occupancy is high, and there are few empty units. My client had all of these qualities, with good occupancy, long lease terms and a strong rental yield.

I secured the full £20million loan for my very happy client, for 4.5% over a 5-year term at 60% LTV.