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Austrian raises 250m euros from Art Nouveau landmark
AUSTRIAN billionaire Rene Benko monetised the signing of a long-term lease on a historical Vienna property by selling 99-year bonds worth almost twice what the building was valued in September.
An early 20th century Art Nouveau jewel, formerly the headquarters of the Austrian postal savings bank, backs 250 million euros (S$378.5 million) of covered notes sold to German insurer R+V Versicherung, according to a mortgage deed linked to the securities that was filed to the Austrian land register this month.
No prospectus or terms were published for the deal.
Purchased in 2013, the then vacant landmark building was held in the books of Mr Benko's real estate firm Signa Prime Selection with a gross asset value of 130 million euros just last year, according to a prospectus for a different bond marketed in September last year.
That was before Signa in November reached an agreement for a 99-year lease with the Austrian government's real estate manager BIG, which plans to transfer some state university faculties there.
The agreement ensures that the historic lobby remains open to the public and to architecture students who come to Vienna to study the building. Art students will also be able to have a base close to Vienna's many inner-city cultural institutions.
The securities yield around 1.5 per cent, according to a person familiar with the deal.
That pricing is based on an annual rent of around 3.5 million euros BIG is paying, said a source, who asked not to be identified because the deal was private.
Signa revalued the building, known in German as Postsparkasse, to more than 300 million euros after the deal with BIG was struck, the person said.
Austria's 100-year government bond due 2117 yields about 0.8 per cent. Prime office yields that building owners generate from long-term private tenants in Vienna are below 3.5 per cent, according to Vienna-based real estate adviser EHL.
Signa is foregoing a higher market rent from a hotel or luxury flats for the long-term term cash flows from a zero-risk tenant.
Among the shareholders of Signa Prime are insurers including R+V, trusts and wealthy European families. An attempt to tap a wider range of investors with a senior unsecured bond did not lead to a deal last year. BLOOMBERG