Branicks - comment
Neutral overall for creditors, the VIB loan is repaid, and the security is released. The institutional business will see its value grow when the real estate market improves in Germany, but Branicks will capture much of the upside through its 68% ownership of VIB. Extending the loan would have been a bone of contention with the VIB minority shareholders. Branicks is still experiencing difficulties in selling assets at book value, despite our asset valuations being lower than the company’s. An Amend and Extend operation in Q4 is required, but we see value above the trading levels of the bonds.
We had expected the VIB loan to be extended, but repayment via a transfer of the Institutional Business will achieve the same result. The security given to VIB for the loan will now be released. We expect the difference between the loan from VIB and the €360m valuation will be a receivable in the books of Branicks rather than cash, but the releases from both companies are not explicit. The valuation of the Branicks institutional business is €360m (4.1% of the €8.8bn AUM). We would expect the price paid to be the book value at Branicks (the €427m in the accounts will include the VIB institutional business).