The client is a fund investing in a portfolio of properties (B locations) in Germany. The fund was in default on their loan facility, as their valuations brought the loan under the required 85% Loan To Value ratio (LTV). This was an umbrella facility with one UK bank.


Cycas advised on the negotiations with the bank to restructure the loan facility. We reviewed the property cash flows for the fund and concluded that the portfolio was achieving a good Interest Coverage Ratio (ICR), but was in default on the LTV. Furthermore Cycas concluded that the bank had as much incentive as the Client to solve the default (due to the bank’s higher equity coverage ratios, for loans in a default situation).


It was Cycas who advised taking the LTV clause out of the contract in exchange for a cash sweep, which would lower the exposure for the bank in the long run and solve the default. The fund management negotiated with the bank and restructured the loan accordingly.