Aegis Asset Management Reports EOD Incident at German Building... Investment Losses Inevitable

Investors who invested in the German Trianon office building through Aegis Asset Management funds are expected to incur losses.

According to the financial investment industry on the 4th, Aegis Asset Management announced yesterday that the loan for the 'Aegis Global Real Estate Investment Trust No. 229 (Derivative Type)' (hereinafter referred to as the Trianon Fund) has ended due to the maturity of the loan forbearance agreement.

The forbearance agreement is a measure where the lenders do not immediately declare an "Event of Default" (EOD) and grant a grace period for the existing loan contract. However, with the expiration of this agreement, an EOD has occurred concerning the borrowings raised by the Trianon Fund.

Aegis Asset Management initially signed a forbearance agreement once on the original maturity date, November 30 of last year. On February 28 of this year, they signed a modification agreement to extend the maturity date again until May 31.

However, the lenders refused to extend the modification agreement, resulting in an EOD on the loan contract. Additionally, under local law, this triggered grounds for insolvency of the local special purpose company (SPC).

Aegis Asset Management stated that negotiations failed because the lenders presented unreasonable conditions for re-extension, such as demands for additional pledge settings.

It is known that Aegis Asset Management judged that securing objectivity in the sale through the SPC’s insolvency process was better than unilaterally accepting conditions favorable to the lenders but unfavorable to investors.

The exact scale of investor losses is expected to be confirmed after asset disposal led by the lenders takes place.

Previously, the Trianon Fund was established in 2018 with a total of 370 billion KRW, raising funds roughly half through public funds and half through private funds. Mainly, private funds were sold to institutions, and public funds were sold primarily to individual investors. However, profitability warnings were triggered as the major tenant, Dekabank, which accounted for more than half of the rental income of the fund’s related assets, did not exercise the lease renewal option.

The vacancy of the major tenant led to a decline in the building’s asset value, causing the loan-to-value ratio (LTV) to rise, and by the end of 2022, it exceeded the threshold (LTV 70%) that constitutes grounds for an EOD.

Aegis Asset Management is preparing response measures through a local law firm. They also stated their position to do their best in management until the end by taking all possible measures to protect investors.

This content was produced with the assistance of AI translation services.