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Hedge Loan Advisory Case Study


German Housing Company Becomes Investment Opportunity through Situs Valuation work

A global investment bank looking at hedge position on a European corporate loan leveraged Situs’ financial insight and local market expertise to fully grasp all aspects of the deal.

Challenge

Global Investment Bank wanted to hedge a corporate loan backed by a German housing company involving more than 160,000 residential units. Client requested a valuation from Situs to better understand the real estate fundamentals and the economic outlook of the listed company.

Solution

Situs prepared a comprehensive SWOT analysis:



  • Brief overview of the current rental portfolio (location benefits, rent levels compared to market, potential CapEx backlog, etc.)

  • Debt profile (maturity profile, interest rates and covenants)

  • Competition (market overview, description of competitors, detailed peer comparison)

  • Cash flow analysis and forecast (focusing on free cash flow post debt service for senior/secured loans and the covenants involved in it)

Benefit

Situs identified several opportunities and risks the client had not seen and allowed the client to remain focused on core business while leveraging on-demand resources efficiently. Situs’ highly specialized knowledge of the German real estate and finance market allowed the client exceptional insight into the market, the deal and the broader financial issues at play.