London (March 16, 2010) – Sidley Austin’s* London-based International Finance Group have engaged in a “landmark event in structured finance.” The London team advised Whitehall Funds, RREEF Real Estate Opportunity Funds, Pirelli & C. Real Estate SpA, Generali Immobiliare and Borletti Group as Sponsors and Cairn Financial Products Limited as Financial Adviser in relation to the restructuring of approximately €3.5 billion of debt including approximately €1.13 billion of Commercial Mortgaged-Backed Securities (CMBS) Notes issued by Fleet Street Finance Two P.L.C.
The transaction is the first CMBS securitisation in Germany to be fundamentally restructured and is one of the largest and most complex restructurings in the German market. The restructuring included an extension of the maturity of the various classes of bonds issued in the CMBS by Fleet Street Finance Two P.L.C. and an increase in the coupon payable to certain classes of bondholders. It is believed to be the first comprehensively restructured CMBS transaction in the European market. The principal reason for the restructuring was the sole underlying tenant, Karstadt, going into bankruptcy in Germany.
The restructuring of the CMBS Notes could pave the way for the renegotiation of billions of euros of complex property financings. Many investors in CMBS have struggled to restructure these complex financings as the property backing them has plummeted in value.
“It is a landmark event in structured finance, and will act as a precedent for transactions exposed to refinance risk where having more time is viewed as potentially positive,” said Euan Gatfield, analyst at Fitch Ratings. “The availability of this course of action in and of itself will dispel the automatic assumption that structured vehicles inevitably become forced sellers as they approach legal maturity.”
In the case of Fleet Street Finance Two, one bondholder described the restructuring as “an enormous task” because of the large number of lenders involved.
Led by Sidley partner Graham Penn, the team included partner Jason Richardson and associates Lisa Cargill, Paul Gray and Andrew Macdonald.
Sidley Austin LLP is one of the world’s largest full-service law firms, with approximately 1700 lawyers practising in 17 U.S. and international cities, including Beijing, Brussels, Frankfurt, Geneva, Hong Kong, London, Shanghai, Singapore, Sydney and Tokyo. Every year since 2003, Sidley has been named to Legal Business’ Global Elite, its designation for the 18 firms “that define the pinnacle of the legal profession.” Sidley is recognized for service and responsiveness—BTI, a Boston-based research and consulting firm, has named Sidley as one of only two firms to have been in the top ten of the BTI Client Service rankings every year since the inception of those rankings in 2001, and was number one in three of those years.