Lone Star has won the entire two-tranche Project Salt and 12 of the 14-tranche Project Rock legacy IBRC commercial property loan books with a combined face value of just over £5.2bn for a discount to gross unpaid balance of greater than 30%, CoStar News believes.
The purchase price of the two commercial property loan pools is understood to be around £3.5bn with Lone Star’s purchase to be financed by Citi, Wells Fargo and RBC Capital Markets, CoStar News understands.
Lone Star’s sweep of the two major IBRC loan books only excludes two loans within Project Rock, which traded to a consortium including Sankaty Advisors and Canyon Capital Advisors.
KPMG announced the winners at 10 am this morning, as reported by CoStar News here.
Underbidders on Project Salt comprised a consortium bid by CarVal Investors, Goldman Sachs’ Special Situations Fund and CR Investment Management as well as Cerberus Capital Management and Oaktree Capital, CoStar News understands.
The sale of the entire Project Salt and Project Rock by Kieran Wallace and Eamonn Richardson of KPMG Dublin, IBRC’s joint special liquidators, is a huge turnaround on success expectation from last summer when the loan sale process began, underlining significantly improved outlook for secondary stock in the UK, Ireland and Germany.
Project Rock is comprised of 816 loans from 319 borrowers and 217 borrower groups with a recorded real estate value of £3.94bn, dated to 31 July 2013.
Project Salt is comprised of 609 loans from 233 borrowers comprising 91 separate borrower connections and 350 properties had a recorded real estate value of £914m dated to 31 July 2013.
The aggregate seven-month old real estate valuation of projects Rock and Salt was £4.85bn, however, these valuations are out of date and do not capture the improvements in the valuations of certain assets within the loan pools in the intervening months.
This, coupled with the net result of two still unknown loans tranches which were not sold to Lone Star, leads to the understanding that the Lone Star’s purchase price reflects a final discount to latest real estate value of between 15% and 20%, CoStar News understands.
All of which underlines that this giant trade is a much better resolution for the two commercial property loan portfolios than KPMG could have originally hoped for when the sale process began last August.
Project Rock’s underlying assets are diverse including a loan secured against Stadium of Light, the football ground of struggling Premier League side Sunderland, owned by Ellis Short, the former managing director of Lone Star’s Asia Pacific business.
Also in Rock are loans to a self-catering holiday park operator PD Parks Limited; Fantasy Island, a family resort in Skegness; Arazim Investments; Parkdean Holidays, owned by David Pearl’s Vendart; German retail fund which was owned by Taurus Capital Markets and Anglo Irish Bank Private Banking and much more.
For a detailed over view of the underlying assets in Project Rock and Project Salt:
- please click here for Project Rock’s multi-borrower tranches;
- please click here for the standalone hotel tranches; and
- please click here for the composition of Project Salt.
A spokesperson for the special liquidators said in a statement this morning: “The special liquidators are very pleased with the successful conclusion of loan sales in respect of three major portfolios of IBRC loans, namely Rock, Salt and Evergreen.
“Thus far, market interest in IBRC’s assets has been confirmed with the conclusion of sales at bid levels that exceed independent valuations conducted on these books. The sales process is continuing on the remaining books according to the programme previously set out by the special liquidators.”
Lone Star has dominated the purchase of major loan portfolio sales in the years since the global financial crisis, including the acquisition of the sub and non-performing loan pools within the former Anglo Irish Bank’s entire $9.6bn (€6.7bn) US property loan portfolio.
Today’s purchase of the bulk of the former Anglo’s UK and German property loan books cements Lone Star as the single lead acquirer of the fallen Anglo Irish Bank’s legacy property debt.
Final bids for IBRC’s €1.8bn Project Sand, which is thought to also include Lone Star as well as Oaktree Capital in the final line-up, are due on 14 March, while final bids on the €9.3bn Project Sand are due the week later.
In a comprehensive overview of the IBRC loan portfolio sale process last week, CoStar News reported that final bids on the €9.3bn Project Stone – now due on 21 March – are expected from Lone Star, Deutsche Bank, Apollo, Cerberus as well as a CarVal Investors, Goldman Sachs’ Special Situations Fund and Pepper Asset Services consortium.
Finally, binding bids for the €800m Project Pebble loan book, which is comprised of Paddy McKillen’s loans, are currently under consideration by KPMG.
This year has already been highly successful for Lone Star having managed to negotiate a complex legal and creditor minefield to acquire Coeur Défense in Paris, as revealed by CoStar News.
Lone Star is financing the acquisition with around a €935m whole loan from BAML, which is still syndicating the debt.
Four weeks ago, Lone Star also won NAMA’s €373m Project Holly Irish non-performing loan portfolio – Sean Reilly’s McGarrell Reilly Group loan book – paying around €220m and reflecting a circa 41% discount, as first revealed by CoStar News.
Lone Star declined to comment.