European Government Accommodation Deal of the Year 2011: BMBF


Amber Infrastructure and BAM Deutschland closed the financing for the new headquarters of Germany’s Federal Ministry of Education and Research – Bundesministerium für Bildung und Forschung, or BMBF – on 3 August. The deal is the first civil PPP at the federal level to close and only the second federal PPP deal to close following the Eu164 million ($216 million) Fürst Wrede military barracks in Munich, which Hochtief closed in 2008. It is also the first time Partnerschaften Deutschland, an independent institution set up by the federal government to advise on PPP projects, has advised on a PPP financing.

The German PPP market still lags behind some of its European peers. According to a report published in 2010 by EPEC, a joint venture involving the European Investment Bank and the European Union, Germany only ranked 8th in total investment volume for PPP. The project does not mark a watershed in PPP for Germany, since its preference for forfaiting deals at the local level is likely to persist, but it is an important benchmark for other federal PPP deals.

As Jürgen Bufka, investment director at Amber Infrastructure says: “Having created a template for these transactions with the federal government we expect to see more such projects brought forward.” Says Andreas Feuerstein, partner at Feuerstein Kirfel Spieth Munich, “it was a landmark deal for the German PPP market, in the sense that it was only the second federal PPP project overall and the first one in the civil sector, which gave it quite a lot of attention. For Partnerschaften Deutschland it was an important deal to complete and to bring to financial close, after a few deals in the past that didn’t make it that far, which gave it a large profile in the market, way beyond the size of the deal.”

Although the deal is not part of a formal PPP programme like the A-models or the UK PFI initiative, its origins are down to the Ministry of Finance’s decision to embrace PPP as a form of procurement following the 2005 election and ascension of Peer Streinbrück to the position of finance minister.

Partnerschaften Deutschland was formed in November 2008 under the auspices of the Ministry of Finance and the Ministry of Transport, Building and Urban Development to consult on the usage of PPP for a greater proportion of infrastructure projects. Partnerschaften Deutschland advised on other projects, but BMBF was the first to make it to close.

The project entails the construction of a new building for the ministry under a 30-year design-build-finance-maintain contract. The new headquarters will be located in Berlin’s government district next to the river Spree. The project, which is backed by availability payments, should be fully operational by August 2014.

The bidding process attracted many established names. Hochtief, Bilfinger Berger, Strabag and Porr Austria, in addition to the consortium of Amber Infrastructure and BAM Deutschland, originally submitted bids for the project. The grantor, Bundesanstalt für Immobilienaufgaben then shortlisted both Amber Infrastructure/ BAM Deutschland and Hochtief for the deal with best and final offers due in May.

The sponsors sought support from five banks: DZ Bank, Kommunalkredit Austria, LBBW, NIBC, and SMBC, but at the first bid stage decided to proceed solely with SMBC, which was covering to underwrite 100% of the debt. DZ Bank joined shortly afterwards and was, as a relationship bank, an obvious choice for the sponsors.

The grantor named Amber Infrastructure and BAM Deutschland preferred bidder in July, giving them a tight 6-week period to reach financial close. The deal closed within this timeframe with Eu78.6 million in long-term commercial debt. The loan is fully amortising and there are no cash sweeps, so the sponsors are not subject to any refinancing risk.

The tenor on the debt matches roughly the concession period, with a slight tail of 6 months. The pricing on the debt is competitive, with an initial margin of 180bp over Euribor followed by step-ups over the life of the debt. Repayments on the debt are six-monthly. The tickets on the debt are split fairly equally between the two banks, with SMBC taking Eu39.85 million and DZ Bank taking Eu38.75 million. DZ Bank then sold down a portion of its debt to Kommunalkredit Austria shortly after close.

In addition to the debt amount, the sponsors are providing Eu6 million in equity, 97% of which comes from Amber Infrastructure, while 1% each comes from BAM Deutschland, BAM Immobilien- DiensleistungenandINPP.INPPwillthentakeoverAmber Infrastructure’s equity portion once the project is completed. The financing is rounded off with a Eu50 million government subsidy, which will be paid in three instalments over the construction period when certain milestones are reached.

Partnerschaften Deutschland is advising at the moment on the procurement of another ministry project, the Haus der Zukunft, a type of museum that will seek to show Germany as a site for innovation, and which will take the form of a standard PPP contract. The deal is likely to be tendered early next year after the selection of an architect for the new building.

“I think there was a general hesitance and also a non- familiarity with these types of schemes at the federal level” says Karl-Heinz Heller, of Partnerschaften Deutschland. “There’s been a reluctance to find a German way to do these deals and I think the more of these transactions that happen, the more people get comfortable that they work and are an appropriate solution”.

BMBF Betriebs GmbH
STATUS: Financial close 3 August 2011
DESCRIPTION: 30-year concession for the design, build, finance and maintenance of the new headquarters of the Federal Ministry of Education and Research
SIZE: Eu134.6 million
GRANTOR: Bundesanstalt für Immobilienaufgaben
SPONSORS: Amber Infrastructure, BAM Deutschland
MLAS: DZ Bank, SMBC
OTHER LENDERS: Kommunalkredit Austria Grantor’s financial adviser Partnerschaften Deutschland
GRANTOR’S LEGAL ADVISER: Luther Rechtsanwaltsgesellschaft
SPONSORS’ LEGAL ADVISER: fks Rectsanwälte Steuerberater München
LENDERS’ LEGAL ADVISER: Norton Rose
TECHNICAL ADVISER: Turner & Townsend
INSURANCE ADVISER: Willis
MODEL AUDITOR: PKF