Lone Star has signed an agreement to acquire 100% of the shares in the vehicle which controls the 1.9m sq ft Coeur Défense office complex in Paris, paving the way for the private equity firm to seize control over the properties.
CoStar News broke the story that Lone Star was in pole position to acquire Coeur Défense yesterday.
A special purpose vehicle controlled by Lone Star Real Estate Fund III has agreed with LB Dame SCA to acquire 100% of the share capital.
LB Dame SCA is the parent company of Dame Luxembourg SARL, itself the parent company of Heart Of La Défense SAS, owner of the Coeur Défense properties.
Lone Star continues to pursue a consensual discounted pay-off with creditors of Coeur Défense, which is comprised of the €1.52bn Windermere XII CMBS and €119.95m in unlisted junior notes across three-tranches.
Among the securitisation creditors are Perella Weinberg, Credit Foncier and AXA.
In a stock market announcement this lunchtime, EuroTitrisation stated: “An affiliate of the Lone Star Real Estate Fund III entered into an agreement with LB Dame SCA’s shareholders pursuant to which it would acquire 100% of LB Dame SCA’s shares and related shareholder loans.
“Change of control would occur upon antitrust clearance obtained from the French Competition Authorities.
“Discussions have been initiated in order to define the conditions upon which the securitised mortgage loans held by the FCT will be repaid on or before July the 10th, 2014.”
Lone Star is attempting to negotiate a consensual discounted pay-off to creditors on a sequential basis which is expected to value Coeur Défense below €1.5bn.
Subsequent to this, Coeur Défense will consensually exit the “safeguard proceedings” that the office complex was within, which has protected the properties from creditor enforcement since autumn 2008 under French law.
Lone Star is expected to refinance the asset and undertake an aggressive asset management programme over the next two years – including re-gearing maturing leases, leasing up vacant space and investing capex to modernise the properties – before a likely sale to a sovereign wealth fund thereafter.
Coeur Défense has a 23.9% vacancy rate and dwindling lease profile of just 3.2 years to first break clause and 5.3 years on a full lease expiry basis.