Four properties are available for 6 million euros rent and 150 million euros book value
hek Frankfurt
The insolvency of four subsidiaries reduces the rental income of the commercial real estate group Demire by 6 million euros a year. The company announced this upon request. The amount corresponds to almost 8% of the rental income in the 2023 financial year. The four properties, the so-called Limes portfolio, will be transferred to the real estate bank DZ Hyp. Demire and the bank were unable to agree on a standstill agreement or a repayment of the loan outside of an insolvency of the property companies. The loan for the Limes portfolio acquired in 2019 was 82 million euros. It was due on June 30, 2024.
Bond restructuring planned
Demire is in financial difficulties because a EUR 499 million bond is due to be repaid in mid-October. The term is now to be extended until the end of 2027. Partial repayment obligations are also planned. According to Demire, more than 90% of the outstanding nominal amount is behind the debt restructuring plan. Major shareholder Apollo, which holds 58.6% of the shares, is supporting the restructuring with shareholder loans of up to EUR 100 million.
Bank wanted further collateral
The insolvency of the four property companies announced on July 22nd has left a hole in the balance sheet. Based on the usual loan-to-value ratio of 50 to 60%, this results in a book value of around 150 million euros, which must now be written off. On the other hand, the loan and upcoming investments are no longer available.
The bank had demanded additional collateral for a standstill agreement, explained the Demire spokesman. This was not available. The four properties were office buildings in Essen, Aschheim near Munich and Cologne, as well as a mixed-use property in Kassel. In Essen there are public tenants, namely the police and in Cologne the licensing authority. The vacancies in Aschheim – the building is located near the former Wirecard headquarters – have been slowly reduced.
Voting is still pending
The plan was to invest up to 120 million euros in the properties in Essen and Kassel with Apollo support. These investments could have triggered a transfer of the Limes portfolio to the major shareholder, which is no longer happening.
The date for the creditors’ vote on the bond refinancing is still pending. Demire considers the planned base interest rate of 5% from October to be quite favorable. However, three percentage points will be added in 2027 if the bond is not fully repaid by the end of 2026.
