Summit Germany sells 18 small properties

German commercial property investment company Summit Germany entered into an unconditional agreement for the sale of 18 small properties for total consideration of €15m, it announced on Monday, of which €9.1m will be in cash with the balance through a five-year loan bearing an average annual interest rate of 3%.

The AIM-traded firm said the loan was secured by a first rank mortgage over the properties, and the shares of the companies in which they are held.

It said the sale price reflected the value of the properties in the company's financial statements for the year ended 31 December 2016, adding that completion of the transaction was expected within “a few days”.

“Most of the cash proceeds of the sale will be used to part repay one of the company's debt facilities,” the Summit board said in its statement.

“Following preliminary discussions with the lender of the facility, subject to repayment of certain agreed amounts, the facility will be extended for an additional 10-year period with a total expected interest and amortisation rate of 5% per annum, compared to the current rate of 8% per annum.

“The company and the lender aim to complete these amendments to the terms of the loan before 31 December.”

Summit said that, following the repayment of €9m, the loan balance with the company's lender would be reduced to €51m.

It added that the sale of the properties improved the overall quality of the company's portfolio, and was consistent with its strategy to focus on “substantial properties” in “attractive locations”, and to dispose of non-strategic and small properties.