AerCap sells equity interest in GFL

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By admin April 24, 2014 16:49

AerCap sells equity interest in GFL

Two days ago, AerCap announced that it had completed the sale of 100% of the class A common shares in Genesis Funding Limited (GFL) to GFL Holdings, an affiliate of Wood Creek Capital Management.  GFL is an aircraft securitisation vehicle with a portfolio of thirty-seven aircraft with an average age of thirteen years valued at approximately $750 million.

As part of the agreement, AerCap Ireland continues to act as servicer for the GFL aircraft portfolio.

Edward O’Byrne, Chief Investment Officer of AerCap, commented: “We are pleased to announce this transaction, which is consistent with AerCap’s portfolio management strategy.  The acquisition by Wood Creek is yet another example of the attractiveness of the commercial aviation sector for institutional investors.”

Brett D. Hellerman, Chief Executive Officer of Wood Creek commented: “Wood Creek has executed several transactions with AerCap in the past, and we are excited about expanding our aircraft portfolio. We look forward to working with AerCap in the future.”

Wood Creek was advised by WNG Capital.

Although the financial terms of this transaction have not been disclosed at this time, the net proceeds, book gain/loss, fee income, transaction structure were disclosed in 2012 when AER sold its $1B ALS Securitization interest to Guggenheim Partners.

Wells Fargo analysts have thus been able to deduce that since AerCap recorded an $47 million accounting loss on the ALS deal, which is being reduced (over time) to effectively zero from servicing fees and the amortization of up-front charges, they “suspect that, given the firming of A320/737NG values over the past 12-18 months, AER could realize a net gain on the GFL deal”, says senior analyst Gary S. Liebowitz.

“We estimate the removal of this older fleet (average age: 13 years) reduces AER’s average fleet age from 5.4 years (as of 2013-end, pre-ILFC) to 4.6-4.7 years. The GFL fleet consists of 3 A319s + 11 A320s + 1 A330 + 17 737NGs + 2 747 Freighters + 1 737 Classic + 2 Embraer 170s. The sale brings AER’s pre-ILFC freighter, Embraer, and 737 Classic exposures to zero,” writes Leibowitz.

He adds: “We would expect AER to redeploy any net proceeds into other high-return aircraft acquisitions over time, but until then we believe the GFL deal could be marginally dilutive to continuing core-leasing EPS. Still, in the context of a ~$35B post-ILFC aircraft portfolio, the GFL sale barely meets a 2% materiality threshold.”

admin
By admin April 24, 2014 16:49
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