Quartiers secures EUR 18.5 million in financing at a reduced interest rate, freeing up cash flow for growth and allowing resumption of dividends on preference shares
Quartiers Properties AB (publ) (“Quartiers” or “the Company”) has in line with a previously communicated plan, refinanced the loan with DeShaw that the company took out in 2020 in connection with the outbreak of Covid-19 in Europe. The refinancing of the loan removes the obstacles preventing the Company from paying dividends on its preference shares. The new lender is Alteralia Real Estate Debt FIL (“Alteralia”). The EUR 18.5 million loan is secured against the Boho Club and CFS Residential properties, as well as pledges in a number of the Company’s subsidiaries. Of several possible financing options, including bank financing, the Alteralia loan was considered to be the most flexible choice with regard to the sum loaned and the securities posted. It was also viewed as the option that provides Quartiers with the best opportunities to free up and raise new capital for additional expansion.
The interest payable on the new loan consists of a variable part and a base rate of 5%. This base rate may rise in line with the 3-month Euribor rate (“EURIBOR 3M”) in the event that EURIBOR 3M exceeds zero. The variable part of the interest rate can fall from the initial 1.50% to 0.75% if the Company’s loan-to-value ratio on the pledged assets decreases from the current level of around 58% to below 45%.
The new Alteralia loan allows the company to arrange other debt financing and to acquire new assets. Security for the new loan with Alteralia is limited to the properties around the Boho Club, which means that the Company can take out separate financing for the construction of, for example, Ocean View (project to build and sell 60 apartments), and freely utilise the cash flow from housing sales for new investments and projects.
Moreover, Quartiers is no longer prevented from paying dividends on its preference shares. The Board will shortly be presenting suggestions for a plan for when and to what extent dividend payment will recommence, as well as information about when repayment of accrued preference share dividends can be made. A resolution from the General Meeting is required to allow resumption of dividend payments.
The refinancing package entails a reduction of the annual interest costs of around SEK 12 million. The loan has a duration of five years, with the option of early repayment at no extra cost after two years.