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Brookfield has restructured a loan secured against a €475M, or £406M, portfolio of half-vacant German residential properties after completing a similar process with a London office tower.
On Wednesday, 100% of the investors that own a €319M debt secured against the Haus portfolio in north west Germany voted to extend the maturity of the loan from July 2026 to July 2029. The restructuring offers the prospect of further annual extensions and changes the interest rate margin that Brookfield pays.
The extension provides more time for Brookfield to refurbish and lease up empty flats. The portfolio comprises 6,300 units around cities like Dortmund, 52% of which are vacant.
When Brookfield bought the portfolio from German private property companies Degag and Northeimer in 2021, it was 33% vacant.
Bondholders were told that soon after Brookfield bought the portfolio, it realised it would be unable to refurbish and lease up units as fast as expected due to the ongoing impacts of the pandemic, rising construction costs and labour shortages.
The amount that Brookfield required for capital expenditure has risen from an estimated €76M to an estimated €134M, a separate report to bondholders said.
The Canadian investment giant has been steadily paying to refurbish the residential units. A business plan presented alongside the restructuring said it expected to start leasing more units at market-level rents from now on.
The business plan also envisions the sales of individual buildings starting this year, netting €255M by mid-2028.
The news comes about a week after Brookfield received consent from bondholders to extend £460M of debt secured against the 704K SF Citypoint office tower in the City. That will give it time to lease vacant space, update the building and increase the value.
Brookland Partners advised Brookfield on the two restructurings.
Brookfield has also refinanced another London office tower in which it is a minority joint venture partner, the 324K SF Aldgate Tower on the eastern edge of the Square Mile.
Citigroup provided a new £115M loan secured against the building, which is 90% owned by China Life and 10% by Brookfield. The loan has now been securitised.
The building is valued at £250M, down from £346M when the joint venture bought it in 2016.
The previous loan on the building was £192M, and China Life put new equity into the deal in order to secure the refinancing.
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