A US private equity fund mandated BHPERE in July 2015 to conduct the interim management and workout of a €1 billion commercial real estate backed non-performing loan book.
The collateral was mainly commercial real estate such as office, development land, hotel, retail and various other asset classes in Germany.
The private equity fund that purchased this portfolio won a competitive sales process run by a German Hypothekenbank with an underwriting business plan of 4,5 years and a target levered IRR (USD) of 13.
Scope of BHPERE’s mandate was the workout of this NPL book, setup of bi-yearly business plans and resolution of all issues relating to the borrowers such as uncooperativeness and intransparencies regarding the assets. Managing forced administrators, external letting and sales agents as well as insolvency administrators.
A very high accumulation in value was found in a land/development site in Frankfurt which was part of a 15-year-old insolvency. The land generated no cash flow and, therefore, was predicted to be handled with a lot of difficulties especially IRR-wise. With taking a seat in the supervisory board, Boris Hardi handled this complex situation together with the Mayor of the city and various other parties to finally sell well above business plan expectation.
Another important task was to manage the external Loan-Servicer who was appointed to manage the small assets and to run the accounting in Germany. BHPERE respectively Boris Hardi as the Interim Head of Real Estate Germany was appointed to manage this relationship, approve sales, monitor and steer the sales and workout efforts closely.
The set goal was to wind down the 1 bln Euro loan book consisting of 230 Assets in Germany, de-risk and pay back the financing of the portfolio within 4,5 years after closing.
- After 18 months the portfolio has been de-risked by 95%.
- Financing will be fully paid down in month 22.
- No significant assets left.
- IRR of the portfolio levered in USD above underwriting.
BHPERE managed to achieve the above with just 2 FTEs and 1 external advisor for the TOP 18 connections and managed the external servicer in parallel.
- Less cost
- Less time
- Higher IRR
- No permanent employment needed
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