On 27 September 2016 the sale of Propertize to Lone Star Funds was completed. As part of that transaction, three MTNs issued by Propertize have been transferred to the DSTA. The State guarantee for Propertize’s financing was therefore effectively determined. As a result of the debt transfer, the State debt as managed by the DSTA increased by € 2.35 bn at that time.
More information on the sale of Propertize can be found in the press release from NLFI and the Notice which can both be found at the bottom of this page.
Image: Outlook 2016
On February 1, 2013, the nationalisation of SNS REAAL under the Intervention Act (Interventiewet) was enforced. It was determined that the real estate management organisation (formerly; ‘SNS Property Finance’, renamed: ‘Propertize’) would operate independently (financially and operationally) of SNS REAAL.
If losses are incurred, the risk arises that Propertize will be unable to pay back its debts. A State guarantee captures this risk (as announced by the nationalisation letter of SNS REAAL). The State of the Netherlands (the State) originally guaranteed the debt of Propertize with a maximum nominal amount of 4,054,900,000 euro, excluding interests due. This nominal amount was lowered as per December 22, 2014, to 3,600,000,000 euro to reflect the successful repayment of debts and winding down of the real estate portfolio by Propertize.
This guarantee scheme is limited to the nominal amount plus the interest due. This total amount falls within the maximum amount that was foreseen with the nationalisation of SNS REAAL (5,000,000,000 euro).
Directly after the carve-out of Propertize, the State provided a guarantee on the debt that Propertize had with SNS Bank. This debt has been repaid. When Propertize proposes to attract new debt from the market, the State will provide a guarantee, without exceeding the adjusted maximum amount.
Period of guarantee scheme
Propertize aims to unwind the property portfolio as cost-efficiently and profitably as possible in the medium term. The maturity of the funding Propertize will attract is maximised to a period of ten years, as calculated from the start of the guarantee scheme. Therefore, Propertize will not issue debt with maturity dates after 31 December 2023.
The State receives a guarantee fee of 30 basis points on any issues by Propertize the State guarantees. Multiple issues can be covered by a single guarantee. These 30 basis points are calculated based on the total amount outstanding.
The guarantee scheme targets non-complex senior unsecured loans. These are (unsubordinated) loans which are not secured by collateral, such as commercial paper and certificates of deposit of medium term notes, with maturities ranging from 1 month to 10 years (‘plain vanilla’). The loans must be denominated in euro, Sterling or US Dollar. At the State’s discretion and taking into account the refinancing profile and the structure of the balance sheet of Propertize, these loans should match with the liquidity requirements of Propertize.