Bonds Check: AVW reason - investment should pay off
The DHS Basic AG, a 100% subsidiary of the Entry Standard listed AVW Immobilien AG, issued a corporate bond in the amount of up to € 50.83 million. The subscription period is interest free up to 31 pieces May 2011. The extensively collateralized bond has a coupon of 6.1% (plus indexation). In particular, the extensive collateral makes the bonds attractive to investors.
Company
The DHS Basic AG was founded by the Entry Standard listed AVW Immobilien AG in December 2010 and equipped with a Grundkaptal of 1 million €. The company is to acquire the funds from the bond issue has a portfolio of retail and investment properties. These are:
- A shopping center in Hamburg, East Village (market value: 5.5 million €)
- The Plaza Center in Bad Oldesloe (market value: 10.8 million €)
- A SB store and beverage market in Ratzeburg (market value: 7.3 million €)
- The shopping center "Mediterraneo" (Have part of the worlds) in Bremerhaven (market value: 27.2 million euros)
The objects to be acquired under their respective state placement of bonded debt, in that order. You are currently fully owned company in the near environment of the DHS group. There is a low vacancy rate of 6% in the object Mediterraneo. During the term of the loan portfolio level run 36.2% of the leases. Which relates exclusively to the Mediterraneo in Bremerhaven, which is a retail complex with about 50 tenants. Here, however, there is a chance to realize more is leased at rents.
The purchase prices are about 90% of the experts by Prof. Dr. Ing Armin Ohler established market value, so that 10% of the available funds from the bond of the Issuer at leisure.
The bond
The bond is worth a total of 50.83 million €. This value is calculated as the sum of the valuation report of four objects. The AVW AG is a basic requirement for subscription by a group of investors to anchor the major shareholder of AVW Immobilien AG, Frank Albrecht, amounting to 25% of the floated bond volume but not more than before to 12.5 million euros. In this case, explain the anchor investors that their interest rate and repayment claims have an individual subordinated to the claims of other creditors of the bond.
The Issuer has a right to terminate on two dates: 11/30/2013 and 30/11/2014 at 103% to 102% in the event that such objects are sold.
At the time of repayment of the loan must be made in full placement at least € 38.33 million on new refinancing / sale of properties. This corresponds on the basis of current market values of a LTV ratio of 75.4%.
Securing the loan
The loan is secured as follows for the investor:
- Collateral on ranking real property in the amount of approx. 45.7 million euros. This amount represents the purchase price of the objects from the environment of the DHS group.
- Assignment of rental income to the trustee.
- Guarantee protection for coupon and principal of the parent company AVW Immobilien AG.
Strengths
- Extensive collateral
- Indexing provides protection against inflation
- Rental income to show interest obligations.
- Anchor investors around the major shareholder of AVW Immobilien AG have agreed to a drawing of 25% of the volume (up to 12.5 million euros).
- Anchor investors are to outside investors in the secondary.
- Attractive coupon
Weaknesses
- Low equity company works almost exclusively with debt (the bond).
- The most interesting object (Havenwelten) is finally obtained.
Conclusion:
The DH group has the structure of the bond many advantages. It can hold as the objects in their own portfolio and benefit from their development, without being invested with significant equity. In addition, the Company reserves property sales. The quality of the emission is due to be installed collateral benefit of the Noteholders significantly influenced by these collateral instruments. In assessing the security issue are the property and the quality assurance mechanisms underlying the center.
Overall, convinced the security concept. The investment by the major shareholders in the bond and the fact that major shareholders are to outside investors in subordinated convinced. Another positive factor is the indexation payment and repayment rates well above 100% in case of early termination to see through the issuer. And one thing is important: the rental income exceeds the interest payments of the bond. Therefore, an investment should pay off in the bond.
Key data for the DHS basic bond
Issuer: DHS Basic AG
Guarantor: AVW Immobilien AG
Coupon: 6.1% (plus indexation)
Bond rating: BBB-
Issue volume: 50.83 million €
Duration: 4.5 years
Segment: free trade Hamburg
Institutional Sales: Donner & Reuschel
Internet:
AVW Grund AG - Disclaimer: AVW GRUND AG
