DEMIRE prolongs maturity of EUR 148 million promissory note at significantly better interest rate conditions
- Group’s average interest rate on borrowings falls to 4.1%
- FFO to increase annually by EUR 1.45 million starting in 2017
Langen, 28. February 2017 – DEMIRE Deutsche Mittelstand Real Estate AG (ISIN: DE000A0XFSF0) has prolonged the maturity of a promissory note in the amount of EUR 148 million early from its original maturity in 2019 to 2022 at better interest rate conditions. In doing so, the interest rate has been reduced retroactively as at January 1, 2017, from 5% p.a. to 4% p.a. without paying a penalty for early repayment. This decline brings the average interest rate on borrowings at the DEMIRE Group from 4.4% to 4.1%. As a result of the refinancing, funds from operations (FFO) are set to rise annually by EUR 1.45 million starting in 2017. In the event of a partial repayment, DEMIRE also has a one-time option to reduce the interest rate on the promissory note to 3.5% p.a. Such a reduction would lead to a potential further decline in financing costs to 4% and a rise in FFO of roughly EUR 2.2 million p.a.
The promissory note was originally issued in 2014 to refinance the Condor portfolio. Because the investors in the promissory note waived their option for a partial repayment agreed at the time of issuance, DEMIRE can now use the entire recent proceeds from the sale of non-core assets of around EUR 22 million for further growth.
Speaker of the Executive Board, Prof. Andreas Steyer, in his comments said: “The refinancing of the promissory note at significantly better conditions without a penalty for early repayment demonstrates DEMIRE’s excellent standing among investors and banks and underscores the high quality of our portfolio. We are currently working on further ways to optimise our financing structure and are thereby fulfilling our goal of continually reducing borrowing costs and LTV in the DEMIRE Group and further increasing the Company’s value.”