Proven Track Record
Following the Global Financial Crisis, ESTAma was appointed by and on behalf of many secured lenders in both consensual and insolvent situations replacing existing asset managers and sponsors to improve the management of the portfolio and align the asset management strategy with the lenders’ interests.
Balance Sheet Loans secured against Portfolio comprising 160 Retail, Office, Logistics, Assets in Germany, Appointed as Asset Manager and Sales Agent, 2013-16
Balance Sheet Loans secured against Portfolio of 30 Retail Assets in Germany Appointed as Property Manager, Asset Manager and Sales Agent, 2012-14
Two CMBS secured against 49 Logistics, Industrial and Retail Assets in Germany Appointed as Property Manager, Asset Manager and Sales Agent, 2012-16
NPL secured against Portfolio of 64 Retail Assets in Germany Appointed as Property Manager, Asset Manager and Sales Agent, 2014-16
CMBS secured against Portfolio of 7 Office and Retail Assets in Germany Appointed as Property Manager, Asset Manager and Sales Agent, 2012-15
Balance Sheet Loans secured against 2 Portfolios comprising 29 Retail Assets in Germany Appointed as Asset Manager and Sales Agent, 2012-14
Case Study –
Deutsche River Appointment as Asset Manager and Sales Agent
Portfolio Key Facts & Strategy
160
Assets
€500 M+
original purchase price
98
Assets with Asset Management Potential
~40%
Upside on “as-is” exit
3 Years
WALT “as-is”
7 Years
Target WALT “post-AM”
Situation
A portfolio of 160 retail, office and logistics assets held by five Luxembourg based SPVs was financed by Deutsche Bank as secured lender prior to the Financial Crisis. By 2013 the portfolio was heavily under water with the sponsor no longer aligned to the lender’s interests. The secured lender triggered the insolvency of the SPVs and Luxembourg insolvency administrator Mr. Alain Rukavina (“IP”) was appointed by the court.
Asset Management Strategy
ESTAma produced a business plan including an asset management strategy for each asset, exit pricing as well as a cashflow model. The plan identified potential for each tenancy/unit and included a sales strategy reflecting the anticipated exit timing considering the asset management initiatives for each asset as well as type of asset, risk profile on exit, potential buyer type and whether each asset should be sold individually or as part of a sub-portfolio. The assets were priced both for an “as-is” sale and “post-AM”. For asset with potential the plan identified an upside of ~40% over the “as-is” exit.
In agreement with the secured lender the IP appointed ESTAma to carry out the Asset Management Strategy.
In a prioritised approach ESTAma actively engaged with the anchor tenants and subsequently any other tenants based on remaining lease length starting with shortest to discuss the tenants’ aspirations, needs and potential for early lease prolongations to lift the WALT of the asset management portfolio from 3 to 7 years.
Progress of the asset management initiatives was tracked in a live business plan against the original plan including any adjustments of the disposal strategy with regular reporting to client and lender.
Retail Sale
49 Transactions
49 Assets
43,7% Sales Volume
Sub Portfolio
7 Transactions
111 Assets
56,3% Sales Volume
Total
56
Transactions
160
Assets
100%
Properties with asset management potential
46%
Professional RE Investor
36%
Tenant
10%
Family Office
5%
Private
2%
Owner Occupier
Outcome
In the period 2013 to 2016 ESTAma implemented many of the asset management initiatives and sold all 160 assets through 49 individual sales and 7 sub-portfolio sales. The large number of individual sales were required to create liquidity and homogenous sub-portfolios.
The two largest groups of buyers were professional real estate investors and tenants. The largest tenants in the portfolio did not have a tenant easements registered on the title which allowed ESTAma to leverage the extra-ordinary termination rights under §111 German Insolvency Code.
Overall, the sales proceeds achieved ~40% of the upside originally identified plus rent receipts over the period.