McKillen and Colony win Pebble and refis Jervis SC with €140m M&G loan

Patrick McKillen has won the €800m Project Pebble IBRC loan portfolio, fending off competition from Sir David and Sir Frederick Barclay, safeguarding McKillen’s interest in the trio of prestigious central London hotels through a Colony Capital recapitalisation.

Colony Capital logoIn addition to the Barclay brothers, CoStar News understands Davidson Kempner was also an underbidder on Project Pebble.

CoStar News understands that McKillen’s Colony Capital-financed acquisition of the €800m Project Pebble loan portfolio was at a slightly greater than 20% weighted average discount, but not all loan were bought directly.

McKillen and Colony Capital repaid the legacy debt secured by the Jervis Shopping Centre in Dublin at par and refinanced the prime asset with a €140m five-year loan with M&G Investments, CoStar News can reveal.

Based on an estimated circa €300m value of Jervis Shopping Centre, this would imply a sub 50% LTV senior loan, marking the second Irish commercial property loan by M&G Investments after financing Kennedy Wilson’s €108m purchase of State Street building with a circa €45m senior loan in November 2012.

Paul Dittmann, head of senior commercial mortgages at M&G Investments, said: “This financing puts M&G Investments at the forefront of alternative senior debt providers in allocating capital to quality deals in the recovering Irish commercial property market and exemplifies our speed of execution for borrowers.

“This financing also comes at an opportune time for Irish liquidators which are increasingly looking towards alternative lenders to finance restructurings as liquidators continue to divest their legacy loan books.”

Project Pebble’s centrepiece assets are, of course, the three prestigious central London hotels – Claridge’s, the Connaught and The Berkeley – for which McKillen’s 36.2% stake in Coroin Limited is the security for €246m of legacy personal loans from Anglo Irish.

Coroin Limited is owned by Maybourne Hotel Group’s parent company, which in turn owns the trio of five-star London hotels which represent the nucleus of the long-running bitter legal battle between McKillen and the Barclay brothers.

McKillen had instigated High Court legal action against the Barclay brothers to prevent KPMG, the special liquidator of IBRC, from legally selling his loan book to the Barclay brothers, which is now moot.

Pebble also includes the 793,575 sq ft Frenchgate Shopping Centre in Doncaster which was acquired by Belfast Office Properties, co-owned by Patrick McKillen and Padraig Drayne, for £245m, according to CoStar’s verified database.

CoStar Suite subscribers click here for more proprietary information on this asset.

Last week, Lone Star 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%.

jwallace@costar.co.uk

About CoStar News

Finance Editor, CoStar News
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