29/04/2024, 17:36 Aggregate to handover Fürst to creditors; €150m senior debt raise to complete project (9fin)

Aggregate Holdings 18:23 24th October 2023

9fin-Distressed

Aggregate to handover Fürst to creditors; €150m

senior debt raise to complete project (9fin)
18:23 24th October 2023 • 7 min read

Bianca Boorer | bianca@9fin.com

German real estate company Aggregate Holdings is set to lose a third key asset this year as
it struggles to refinance debt at its development projects, with its last remaining assets also
in default. Senior creditors are preparing to take over its Fürst (or Fuerst) project through a
UK process.

Senior creditors which lent against the Berlin project are being invited to participate in a fully
backstopped €150m senior new money facility with the proceeds being earmarked for project
completion.

Last week (on 16 October 2023) Fürst’s restructuring plan was launched by Project
Lietzenburger Straße HoldCo S.à.r.l, which is a 100% owned subsidiary of Aggregate
Holdings. The plan was supported by Aggregate Holdings and an overwhelming majority of
the subsidiary’s senior creditors. The detailed timetable and proposal have been made
available to creditors through a dedicated website, according to a company release.

The first hearing is set for 1 November 2023, according to the release. The company said that
the efficient process under English law will allow resumption of construction as soon as
possible.

Project Fürst is a development in Kurfürstendamm in central Berlin. It has 109,000 sqm of net
lettable area, according to Aggregate’s FY 22 report. The report said the project was targeted
to be completed by 2024, with more than 50% completed.

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29/04/2024, 17:36 Aggregate to handover Fürst to creditors; €150m senior debt raise to complete project (9fin)

Source: H1 22 presentation

On 17 October 2023, Bloomberg reported that credit fund Fidera was among the senior
creditors that are backing Fürst’s restructuring plan. The article added that
Versorgungsanstalt des Bundes und der Laender (VBL) was also a senior creditor.

Fidera did not wish to comment and VBL did not respond for comment.

The article said that the plan entailed new majority shareholders being put in place and only
the senior lenders would be left unimpaired with their maturities extended. The lower-ranking
junior creditors would be wiped out.

The article said that the junior creditors include Switzerland’s Bank J Safra Sarasin and
Orchard Global. They both filed separate cases in Luxembourg courts to push the
Luxembourg-registered property owning subsidiary into insolvency. Safra Sarasin’s case was
heard on Friday (22 October 2023) and Orchard Global’s is due to be heard on 27 October
2023, according to the article.

On 20 October 2023, Aggregate announced that the Luxembourg District Court unequivocally
dismissed insolvency claims launched by certain subordinated creditors against companies
in the Fürst Group.

The insolvency proceedings ran counter to the objectives of a restructuring plan launched
last week, which was supported by Aggregate Holdings and the overwhelming majority of
senior creditors in order to provide a stable platform for the development to be completed.

“These proceedings were successfully defended by the Fürst Group, with strong support from
senior creditors and its ultimate shareholder Aggregate Holdings, who are seeking to
expedite the project's restart,” Aggregate said in the statement. “In contrast, certain of the

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29/04/2024, 17:36 Aggregate to handover Fürst to creditors; €150m senior debt raise to complete project (9fin)

subordinated lenders, who have to date blocked any consensual common-sense solution,
have been seeking a value-destructive insolvency of the project.”

Debt at Project Lietzenburger Straße Propco S.a.r.l as of 31 December 2022 was:

Source: FY22 report

This isn’t the Fürst time

As mentioned earlier, Fürst is the third asset the group will lose to creditors this year. In June
2023, Oaktree enforced on Quartier Heidestrasse (QH) Track and in March 2023 a group of
convertible bondholders took over Aggregate’s Portuguese subsidiary VIC Properties for an
enterprise value of €670m, as reported. The consortium of investors were led by AlbaCore
Capital Group, Mudrick Capital Management and Owl Creek Asset Management.

The group has sold the remaining five segments in QH. The total proceeds from the sale of
the six segments in QH is around €1bn.

This leaves only its Berlin based Castle portfolio — Green Living and Walter in its Build & Hold
portfolio. It also has €1.2bn of financial real estate assets, which consists of stakes in real
estate companies in Germany including a 5.6% stake in Adler Group.

Source: FY22 report

The facilities related to the Castle portfolio are in default and negotiations are ongoing with
its financing providers, according to the FY 22 report. Castle Investment Holding had secured
notes for €141m due 28 February 2023 with an 18% coupon.

Green Living has 294,000 sqm of net lettable area. Its appraised residual value was €213m
with around €50m estimated rental value and gross development value of €1.4bn, according
to the FY 22 report. Walter has 241,000 sqm net lettable area. It has €308m residual value,
around €60m estimated rental value and €1.2bn gross development value.

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Property values in Germany have been under pressure but are arguably not yet reflective of
the macro environment given a lack of transactions, however it is fair to assume the
valuations as of FY 22 are no longer representative of the value of Aggregate’s assets.

Fürst acquisition
Aggregate bought Fürst from Vivion in June 2021 for €876m, of which €156m was paid in
cash and €720m in financial assets, according to Vivion’s 2022 report. These financial assets
were a €220m 5.5% 2024 Aggregate Holdings-issued bond and €500m of non-traded bonds
maturing in November 2023.

Corestate Bank financed the acquisition and development of Fürst. Corestate said at the time
that it was one of the largest real estate transactions in Germany with a financing volume for
acquisition and development of €1.02bn. Corestate Bank, formerly known as Aggregate
Financial Services (AFS), was bought by Corestate from Aggregate in May 2021, a month
before Fürst was bought by Aggregate.

Until the end of 2021, €151m of the non-traded bonds were settled in cash repayments. In
March 2022, Vivion sold the remaining €336.9m of the non-traded bonds to a third party for
€321m.

Of the €321m, €112.3m was paid immediately in cash and the rest (€208.7m) was deferred
with a 2% interest rate. The deferred payment and interest was settled in March 2023.

For the traded bonds, Vivion settled €196m of the total €220m nominal with Aggregate in
September 2022 through the acquisition of Quartier Heidestrasse (QH) Core. The remaining
traded bonds of €23m were supposed to be settled through the acquisition of QH Spring but
the sale fell through at the start of this year as the conditions agreed in the SPA were not met.

Vivion bought Fürst in 2019 for around €540m, according to a presentation.

Aggregate debt
Aggregate Holdings has around €664m of unsecured notes at the corporate level maturing in
November 2025. According to the FY 2022 report, there was €68.45m outstanding under the
5.5% notes and €595.9m outstanding under the 6.88% notes.

In May, the troubled real estate company secured consent from bondholders to uplift and
defer coupons and relax covenants on its 5.5% 2024 SUNs and its 6.875% 2025 SUNs.

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29/04/2024, 17:36 Aggregate to handover Fürst to creditors; €150m senior debt raise to complete project (9fin)

For the 2025s, coupon payments were deferred to maturity. The coupon increased by 2.75%
percentage points to 9.625%. The 65% Loan-To-Value (LTV) maintenance covenant and the
interest coverage covenant were removed. Lastly, the definition of a material subsidiary was
changed to 20% of total assets from 10% previously.

The proposal for the 2024 notes was the same — a coupon uplift to 8.25%, but the maturity of
the bonds were extended until November 2025 from May 2024.

LTV as at 31 December 2022 was 99.8% up from 59.8% in 2021. The group had €273m of
cash at the end of 2022. The group recorded a loss of €2.8bn in 2022 up from a loss of
€575m in 2021.

Aggregate initially issued €220m of the €250m notional 2024 SUNs to buy Fürst asset from
Vivion (more here). Vivion subsequently returned the bonds to Aggregate as part of the
purchase consideration for two Quartier Heidestrasse (QH) assets in September 2022. It’s
not clear if Aggregate cancelled these bonds and who owns the remaining €30m of the
outstanding 2024 notes. The company did not respond to questions on this remaining stub,
as reported.

As for the 2025 notes, sources previously told 9fin that they were struggling to find holders of
the 2025 notes, as reported. Quirin PrivatBank, who acted as paying agent under the notes,
told a distressed analyst that the bonds were not widely circulated when initially placed, with
Aggregate instructing the bank who to sell the bond to. One American fund bought some of
the notes from JPMorgan, they added.

The 9.625% 2025 notes are quoted at 1.5-mid as shown below:

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29/04/2024, 17:36 Aggregate to handover Fürst to creditors; €150m senior debt raise to complete project (9fin)

Source: 9fin

Breakdown of Aggregate’s debt as of 31 December 2022:

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29/04/2024, 17:36 Aggregate to handover Fürst to creditors; €150m senior debt raise to complete project (9fin)

Source: Aggregate FY22 report

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