Refinancing Property Portfolio Debt Across Three Jurisdictions

• Client: US national with a high-value property portfolio in France
• Property: Four chalets in Chamonix and a villa in Corsica with a combined value of approximately €13 million
• Challenge: Existing debt of €9.6 million was spread across three lenders in Switzerland, Luxembourg and Monaco, with different rates, repayment schedules and exit fees
• Finance: €9.6 million refinancing at 73% LTV, with €2.5 million equity released and €1.8 million placed under an AUM arrangement

Refinancing a substantial international property portfolio can become increasingly complex when existing debt is spread across multiple lenders and jurisdictions. Enness was approached by a US national with a portfolio of four chalets in Chamonix and a villa in Corsica, with a combined value of approximately €13 million.

The client had existing mortgage debt of approximately €9.6 million, representing around 73% loan to value (LTV). The borrowing was spread across three separate lenders in Switzerland, Luxembourg and Monaco, each with different interest rates, repayment schedules and lending arrangements.

The client was looking to simplify this structure by refinancing the existing facilities under a single banking relationship. They also wanted to release additional equity from the portfolio, creating greater liquidity while reducing the administrative complexity associated with managing several separate mortgage arrangements.

The client’s US nationality added another consideration. International lenders can apply different criteria depending on a borrower’s nationality and tax residency, which can reduce the number of banks willing to consider a substantial cross-border property portfolio.

There was also the question of exit fees attached to the existing facilities. Any new refinancing structure needed to take these costs into account while still providing an appropriate overall financing structure. Given the size of the portfolio, differences in the cost of borrowing could have a significant impact on the overall financing arrangement.

Enness therefore approached a number of international banking contacts before identifying a Swiss banking partner that was able to consolidate the existing debt. The refinancing was structured through subrogation, allowing the existing facilities across the three jurisdictions to be brought under one lead banking relationship.

Enness also coordinated the exit arrangements with the existing lenders, helping to manage the costs associated with replacing the previous facilities. Consolidating the debt under one banking relationship provided the client with a simpler financing structure going forward.

The resulting facility provided €9.6 million of refinancing against the €13 million property portfolio, representing 73% LTV. The mortgage was structured over a 20-year term, with the first four years on an interest-only basis followed by 16 years of capital repayment.

In addition to refinancing the existing debt, the structure allowed the client to release approximately €2.5 million of equity from the portfolio. The arrangement also included €1.8 million placed under an assets under management (AUM) arrangement with the Swiss bank.

The case demonstrates how large mortgage finance can be structured around substantial international property portfolios where existing borrowing is spread across multiple lenders and jurisdictions. Consolidating facilities can potentially simplify administration while creating an opportunity to restructure the overall debt and release additional equity, subject to lender criteria.

For clients with significant international property assets and complex existing borrowing, specialist private bank mortgage expertise can help identify lenders able to consider the wider portfolio and structure financing solutions around the borrower’s circumstances.