Credit Suisse has funded a €675m three-year loan to finance Cerberus’ €1.03bn acquisition of two pools of sub-performing Continental European commercial property loans, projects Bravo and Charlie, from Lloyds Banking Group.
Cerberus paid €1.032bn in cash in December for the purchase of projects Bravo and Charlie, which had an unpaid balance of circa €500m and €750m respectively excluding swap liabilities, as first revealed by CoStar News.
CoStar News understands that the margin on Credit Suisse’s three year loan-on-loan facility was in the low 300 basis points range, and reflects a 65% loan-to-cost on Cerberus’ price.
Credit Suisse’s European structured products team structured the deal which is similar to the €90m financing arranged for Apollo Global Management’s €175m Project Lane last April, the Irish non-performing loan portfolio also sold by Lloyds.
CoStar News understands that Credit Suisse will seek to partly syndicate its €675m loan, which is scheduled to amortise rapidly over the three-year duration, with underbidding investment banks expected to be among those interested in buying some of the paper.
Projects Bravo and Charlie were sub-pools of the Project Hampton Continental European loan portfolio sale by Lloyds, which also included the €215m three-loan Project Alpha, a Spanish loan portfolio which traded to Colony Capital last November.
Underbidders on projects Bravo and Charlie included Apollo, Blackstone, Deutsche Bank and Lone Star.
The largest single loan concentration in Project Charlie is the €244.7m senior loan securing the €332.5m Invista European Real Estate Trust (IERET), which is managed by Internos.
On 23 December, IERET confirmed that a short-term loan extension to 30 April this year had been agreed with Bank of Scotland PLC, the Lloyds legacy subsidiary, prior to the sale of the loan as part of the Project Charlie portfolio to Cerberus’ special purpose vehicle, Promontoria Holding 89 BV.
IERET said in the statement that it is exploring “different solutions with the new owner of the loan, on the condition that IERET consented to a relaxation in the terms of the loan’s transferability”.
The statement continued: “The company has now accepted this proposal, and consequently has entered into discussions with the new owners of the loan and will be engaging with them actively in order to achieve the best possible outcome for shareholders in advance of the extended maturity date of the loan.”
Within Project Bravo, comprised of loans secured by commercial properties in the Scandinavian markets, one of the flagship borrowers is VALAD, which is also the manager of a portfolio secured by a separate legacy Lloyds loan also sold to Cerberus, Project Indie.
Lloyds sold the €440m Project Indie portfolio to Cerberus for €312m last September, financed by Nomura. Project Indie is secured by 47 industrial and office German commercial properties in the Valad Europe-managed German Aktiv Property Fund (GAF).
GAF was assembled by Scarborough Group, a real estate firm formerly majority-owned by Kevin McCabe, the part-owner of Sheffield United football club, and Bank of Scotland (BoS), through Uberior Europe, during 2005 and 2006 for around €790m.
The legacy GAF portfolio forms part of the wider Diversified UK and European (DUKE) fund, which was assembled in July 2009, as a 50/50 joint venture between Valad Europe, through Valad Capital Limited, and Lloyds Banking Group, through Uberior Europe, a subsidiary of Uberior Investments, Lloyds’ legacy HBOS private equity arm.
All parties declined to comment.