Real Estate Financing
By real estate financing, we understand both the financing of real estate project developments and the financing of real estate purchases, the so-called acquisition financing.
In these areas, we support you in the complete structuring of the financing, in the search for suitable capital partners such as banks, mezzanine investors, private equity, etc. Furthermore, we accompany and coordinate the corresponding contract negotiations, e.g. when it comes to intercreditor agreements, cost overrun guarantees or the Withdrawal Conditions (cp) goes to actual withdrawal.
We start here with a capital requirement to be financed in the amount of EUR 10-300 million and initially limit ourselves to financing basically on the DACH region (Germany (D), Austria (A), and Switzerland (CH)). Of course, we also talk to international investors
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Joint Venture Partners
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Preferred Equity
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mezzanine capital
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Borrowed capital/senior/junior loan
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Whole Loan
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Forward funding
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Forward purchase
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Bond
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Bridge financing etc.
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Financing and transaction structuring
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Contacting investors - also internationally
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Accompaniment to bank talks and negotiations including ICA
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Sale as a project development or turnkey as a global property
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Project developments or portfolio (redevelopments or acquisition financing) of all kinds
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Asset classes: residential, office, hotel, commercial, logistics, mixed use, healthcare real estate
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Good locations and cities with 100,000 or more inhabitants
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Project volume from €10 million
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Germany, Switzerland, various EU countries on request
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A certain track record must exist
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Property owned or reserved in writing (at least 3 months)
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if possible building rights, pre-letting rate etc.
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Equity of the project developer of at least 5-10% of the project volume
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Requirements for Financing:
Forms of financing:
Our services:
Bridge Financing - When you need it fast
The Bridge financing is particularly important right now when it comes to making capital available as quickly as possible without existing follow-up financing, e.g. when buying land, replacing existing financing or simply because another form of financing is currently not an option (e.g. due to a lack of existing financing). building permit).
Borrowed capital
Borrowed capital is basically required for most project financing or property purchases, unless a whole loan is chosen or the purchase price can be paid entirely from equity. Traditional debt capital is mainly provided by national or international banks or debt funds. Terms depending on the agreement. The interest rate is currently between 3.5 and 6%. at Project developments in the portfolio (conversions / redevelopment / refurbishment) also significantly less.
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Mezzanine capital
In the context of real estate project developments, additional equity or at least equity-like capital is often required in addition to the existing equity in order to be able to represent the equity ratio required by the banks. Short-term mezzanine capital often bridges the period between the financing of the purchase and the follow-up financing of a project (see also bridge financing). Depending on the structure of the repayment, it comes after debt and before equity.
Mezzanine capital is relatively more expensive, and additional securities or pledges are often required despite high interest rates. Extensive and time-consuming agreements are required with the banks financing the outside capital regarding the collateral and payment conditions (see intercreditor agreement)
Nevertheless, mezzanine capital is often indispensable for the further progress of the project development, since in contrast to a joint venture partner it offers relatively few opportunities for mezzanine capital providers to have a say in the project development.
Whole Loan
The Whole Loan is interesting when financing is required as quickly as possible. The mezzanine and the borrowed capital are then obtained from just one provider. Complex agreements with other investors (intercreditor agreement) are no longer necessary. Under certain circumstances, the whole loan can be somewhat more expensive than classic financing via a bank's senior loan. A whole loan is usually only worthwhile for larger financing volumes approx. 20/30 to €500 million
Forward Purchase/Forward Funding
Forward Purchase/Forward Funding
Forward purchase – i.e. the sale of a property that will be completed in the future is a contract in which the seller undertakes to complete a property by a certain point in time and to hand it over to the buyer. In return, the buyer undertakes to buy the property after completion and to pay the agreed purchase price.
This means that the seller does not receive any purchase price payment until the property is handed over. The advantage, however, is easier financing with a solid buyer the exit risk with regard to the repayment of the loan amount. Furthermore, a buyer will usually pay a higher purchase price than if part of the purchase price had to be paid at the start of construction.
That is to be distinguished from this forward funding. With forward funding, the buyer pays the project development costs to the project developer as construction progresses. The final installment is made when the project is handed over as a turnkey project.
We would be happy to discuss with you which form of financing is the best and most promising for you.
Project financing
Almost every project developer is faced with the question of how the planned property is to be financed. From the purchase of the property, the creation of building rights, planning, tendering and awarding, both internal and external costs arise during project development, which must be financed with equity, mezzanine capital, debt capital or a whole loan.
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Equity in project development
Equity is the funds that the project developer brings to the project development from his own assets. It is usually freely available and, as an in-game skin, is crucial for awarding credits.
Since it is well known that equity is the most expensive capital, most project developers aim to keep the equity share as low as possible through clever structuring and instead use mezzanine capital or preferred equity (see below). Depending on the financing and the total investment volume, the required equity in real estate project development is between approx. 5-20% meanwhile sometimes even with 50%. The amount of equity required in each case depends in particular on the characteristics of the project development such as total volume, location, asset class, special risk of the project development as well as the creditworthiness and experience of the project developer.
How does the cooperation work?
Financing exposé
In addition to the mandate contract and the usual project documents, we first need proof from you that you can actually dispose of the property or property. So either a land register extract or a reservation confirmation with a minimum term of 3 months. If you have already approached banks or investors, we need a so-called blacklist in which they are listed. This enables us to assess whether, despite the rejection, it makes sense for us to contact one or the other capital partner again, provided we have a differentiated approach.
We then look through the existing documents, discuss the structuring with you and – of course in consultation with you – create an individual financing exposé. Then suitable investors are contacted with the essential basic data. Here, too, we do not scatter your inquiry but specifically address investors who are known to us. We already know most of them from previous transactions, so that we always have an open door there. If the investor is interested, you will either have direct access to the data room (we will forward the interested parties to you) or we will arrange a joint telephone conference to get to know each other.
Here is a brief overview of the principle for required documents for financing.
Interested?
Simply contact us for a non-binding strategy discussion…..
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