Invista EUR Prf Discussion Threads

[stupidboypike] 11/2/2014 10:39

Kenny, many thanks, very helpful.

Best regards SBP

[kenny] 11/2/2014 10:14

In the recently released full year results, see Investment Manager's report and under Refinancing Strategy:

"However, we believe it is in the best interests of the lender to work proactively with the Company to achieve the common goal of a refinance, either total or in part."

[stupidboypike] 11/2/2014 09:29

"Also clearly stated that, in the property manager's view, it is not in Cerberus's interests to pull the plug (rather than grant an extension of the loan). "

Can you point me at what made you think that please Kenny?

Best regards SBP

[kenny] 10/2/2014 23:46

The results indicated they were in talks on re-financing the rump remaining after proposed sales of 103m. Also clearly stated that, in the property manager's view, it is not in Cerberus's interests to pull the plug (rather than grant an extension of the loan). It is possible that the company goes in to liquidation but even then there may still be at least 50p per share for preference holders.

If Cerberus grant an extension pending the proposed sale of 14 properties then I still believe that, in the longer term, preference holders will recover par.

[muzerewa] 10/2/2014 22:08

Not much reaction to the financial results issued a few days ago. It looks like a more comprehensive sale of properties is now being envisaged, presumably forced on the company. Perhaps they could reach a deal to sell the entire property portfolio to Cerberus for a sufficiently attractive discount to NAV, then to wind up the company and distribute proceeds to shareholders. Anyway, share price has perked up today so maybe something going on behind the scenes?

[stupidboypike] 16/1/2014 08:28

It should be remembered that this latest valuation reduction includes 2.2m for the properties in France that were sold.

Best regards SBP

[cwa1] 16/1/2014 08:00

Announcement this am:-

INVISTA EUROPEAN REAL ESTATE TRUST SICAF

(the "Company")

Invista European real estate trust over-amortizes debt

Debt Reduction

The Company announces that it has used EUR5.5 million from its existing cash balances to make a further repayment of the senior debt facility, thereby reducing the Loan to Value ("LTV"), as defined in the bank facility agreement, to below 70%. This follows the latest valuation of the Company's property portfolio, which attributed a total value of EUR316.1 million to IERET's real estate assets as at 31 December 2013. The payment enables the Company to meet its debt LTV covenants currently set at 70% LTV.

The Company will continue to review the strategic use of cash with reference to its investment objectives.

[joan of arc] 15/1/2014 13:22

I agree. It is almost impossible to read unless you are on the inside and even then you might not know what Cerberus strategy would be. Who knows, they might be kind to IERE and give them lots of extra time but charge them a high fee to do so. There are many possible scenarios.

[stupidboypike] 15/1/2014 12:56

Joan of Arc, part of me agrees with you but on the other hand Cerberus will want to achieve the best price possible until they are 100% certain that they can repay their loan (+ interest and any fees). Once that gets close there could well be more options open to IERE (like refinancing and paying Cerberus off). I think the shares are very risky but at the current price I believe the prefs offer good risk/reward.

Best regards SBP

[joan of arc] 15/1/2014 11:55

As I see it Cerberus will only be interested in getting the loan value out of the properties and are in no way motivated to consider pref or ord shareholders interests. So for me this changes nothing.

[kenny] 15/1/2014 11:09

I am not assuming that Cerberus will grant IERE with a 3 year loan albeit that is a possibility.

Rather I am saying that even in the event of liquidation, winding up the company over 3 years could well mean that preference shareholders are paid out at 100p in the pound e.g. no fire sale of properties.

[muzerewa] 15/1/2014 09:50

Kenny - Thanks for the info. Why do you conclude that this gives 3 years to wind up the company. I can see that the financing from Credit Suisse to Cerberus amortizes over 3 years but is this the same as assuming Cerberus will grant IERET with a 3 year loan extension?

[envirovision] 14/1/2014 23:52

I thought something was going on as I could see our 10K feed into the open market seller had departed this week. An interesting development. I suspect it's rather good quality paper, lucky bsrds!

[kenny] 14/1/2014 23:35

Credit Suisse finances Cerberus projects Bravo and Charlie with €675m loan
Posted on January 14, 2014 3:30 pm by James Wallace

Credit Suisse has funded a €675m three-year loan to finance Cerberus' €1.03bn acquisition of two pools of sub-performing Continental European commercial property loans, projects Bravo and Charlie, from Lloyds Banking Group.

Cerberus paid €1.032bn in cash in December for the purchase of projects Bravo and Charlie, which had an unpaid balance of circa €500m and €750m respectively excluding swap liabilities, as first revealed by CoStar News.
CoStar News understands that the margin on Credit Suisse's three year loan-on-loan facility was in the low 300 basis points range, and reflects a 65% loan-to-cost on Cerberus' price.

Credit Suisse's European structured products team structured the deal which is similar to the €90m financing arranged for Apollo Global Management's €175m Project Lane last April, the Irish non-performing loan portfolio also sold by Lloyds.

CoStar News understands that Credit Suisse will seek to partly syndicate its €675m loan, which is scheduled to amortise rapidly over the three-year duration, with underbidding investment banks expected to be among those interested in buying some of the paper.

Projects Bravo and Charlie were sub-pools of the Project Hampton Continental European loan portfolio sale by Lloyds, which also included the €215m three-loan Project Alpha, a Spanish loan portfolio which traded to Colony Capital last November.

Underbidders on projects Bravo and Charlie included Apollo, Blackstone, Deutsche Bank and Lone Star.

The largest single loan concentration in Project Charlie is the €244.7m senior loan securing the €332.5m Invista European Real Estate Trust (IERET), which is managed by Internos.

On 23 December, IERET confirmed that a short-term loan extension to 30 April this year had been agreed with Bank of Scotland PLC, the Lloyds legacy subsidiary, prior to the sale of the loan as part of the Project Charlie portfolio to Cerberus' special purpose vehicle, Promontoria Holding 89 BV.
IERET said in the statement that it is exploring "different solutions with the new owner of the loan, on the condition that IERET consented to a relaxation in the terms of the loan's transferability".

The statement continued: "The company has now accepted this proposal, and consequently has entered into discussions with the new owners of the loan and will be engaging with them actively in order to achieve the best possible outcome for shareholders in advance of the extended maturity date of the loan."
Within Project Bravo, comprised of loans secured by commercial properties in the Scandinavian markets, one of the flagship borrowers is VALAD, which is also the manager of a portfolio secured by a separate legacy Lloyds loan also sold to Cerberus, Project Indie.

Lloyds sold the €440m Project Indie portfolio to Cerberus for €312m last September, financed by Nomura. Project Indie is secured by 47 industrial and office German commercial properties in the Valad Europe-managed German Aktiv Property Fund (GAF).

GAF was assembled by Scarborough Group, a real estate firm formerly majority-owned by Kevin McCabe, the part-owner of Sheffield United football club, and Bank of Scotland (BoS), through Uberior Europe, during 2005 and 2006 for around €790m.

The legacy GAF portfolio forms part of the wider Diversified UK and European (DUKE) fund, which was assembled in July 2009, as a 50/50 joint venture between Valad Europe, through Valad Capital Limited, and Lloyds Banking Group, through Uberior Europe, a subsidiary of Uberior Investments, Lloyds' legacy HBOS private equity arm.

All parties declined to comment.
==========================================================================
Sorry you could not access the above article, try copying and pasting this link:

hxxp://costarfinance.com/2014/01/14/credit-suisse-finances-cerberus-projects-bravo-and-charlie-with-e675m-loan/

[cerrito] 14/1/2014 23:18

Kenny, thanks for that good find but could not get the link to work;any chance of you cutting and pasting

[kenny] 14/1/2014 22:12

Really good news in the link below. Even on a liquidation, having up to 3 years to wind up the company is likely to be a major advantage for we preference shareholders - when added to the €60m margin of safety that exists, before preference shares start to be underwater:

hxxp://costarfinance.com/2014/01/14/credit-suisse-finances-cerberus-projects-bravo-and-charlie-with-e675m-loan/

Note also the low rate of interest Cerberus will be paying to Credit Suisse.

[kenny] 09/1/2014 17:24

A big buy - 375,000 shares - went through a couple of days ago. Encouraging!

[chinahere] 01/1/2014 18:55

I don't know either but the new debt owner has the ultimate control I think.

If I were the lender then I would stick with them if they could show that my debt was safe. If I was unsure I would force a sale of assets (assuming I bought it at a knockdown rate).

It's very tricky to know what will happen so personally I am staying clear.

[joan of arc] 01/1/2014 17:59

Got me there - you'd have to read the fine print of the contract which we clearly don't have access to.

[chinahere] 01/1/2014 16:45

Did IERE have any say post December 2013 anyway?

Their lender was free to sell or call-in the debt as they liked weren't they?

[joan of arc] 01/1/2014 14:28

I believe that if there was not a worthwhile (whatever worthwhile means) deal for the pref shares then they would never have agreed to a relaxation of the debt terms to allow it to be transferred.

Or am I missing something?

[chinahere] 31/12/2013 18:58

If the new owners have bought the debt at a big discount then they won't mind a fire-sale. It is very risky I reckon....