Royal Bank of Canada finances Lone Star’s Project Holly and 75 St Stephen’s Green

Royal Bank of Canada (RBC) Capital Markets has financed Lone Star’s recent Project Holly Irish commercial real estate loan portfolio win from NAMA and a legacy RBS loan secured by and 75 St Stephen’s Green in Dublin with combined €210m loan-on-loan facility.

RBC logoRBC has extended a three-year loan with extension options for the 70% loan-to-cost (LTC) across the combined Project Holly loan portfolio and 75 St. Stephens Green single loan at a margin around the 400 basis points mark.

CoStar News understands that Lone Star paid €220m for Project Holly and €79m for the 75 St. Stephens Green loan.

Based on a 70% LTC, RBC’s financing ticket was just under €210m and CoStar News understands that the duration is for three years plus extension options as Lone Star completes its asset management plan and eventual sell-on of the underlying properties.

This RBC’s second loan on loan financing mandate from Lone Star in recent weeks, after sharing an equal three-way split of the £2bn financing for Lone Star’s £3.5bn acquisition of the majority of Project Rock and Salt, the legacy IBRC property loan portfolio sold by special liquidators KPMG.

Lone Star is also understood to be equally aggressively targeting the €9bn Project Stone, for which one tranche traded last week.

Three weeks ago, in an extensive report on the live European property loan portfolio sales, CoStar News reported that KPMG was expected to receive final bids on Project Stone from Deutsche Bank, Lone Star, Apollo and Cerberus as well as a consortium comprised of CarVal Investors, Goldman Sachs’ Special Situations Fund and Pepper Asset Services.

In addition, Kennedy Wilson is also understood to be planning submit a final bid. Final bids on Project Stone have been called for 21 March.

Lone Star won the nominally-valued €373m Project Holly six weeks ago at a 41% discount, as revealed by CoStar News. Underbidders included Kennedy Wilson, Starwood Capital and a joint bid from York Capital Management and D2 Private.

The underlying properties in the Project Holly loan portfolio include:

  • the Watermarque Building, Bridge Street & South Lotts Road, Dublin 4;
  • CityNorth, a 100-acre mixed-use commercial development, comprised of office blocks and a hotel, CityNorth Hotel, the four-star 128-bed hotel in Gormanston, Dublin.
  • the 210,000 sq ft Iveagh Court Complex, the five-block business and residential complex at the junction of Harcourt Road and Charlemont Street with current tenants including Mercer, Central Bank of Ireland, Hewitt, Office of Public Works, Skandia Global Funds as well as the Ireland embassy offices of Denmark and Estonia;
  • Marsh House, 25/28 Adelaide Road, Dublin 2, which is the Irish headquarters for March, the global insurance broking and risk management firm.
  • 11-12 Hogan Place, Dublin 2, a four-storey office block close to Merrion Square and south Docklands.

Lone Star acquired the RBS loan secured by 75 St Stephen’s Green back in December, fending of competition from PIMCO and Madison International, for €79m reflecting a net initial yield of 7.49%.

The seven-storey 102,647 sq ft office building is let to five tenants including Hedgeserv and Avoca Capital and currently delivers a €6.18m annual rental income.

All parties declined to comment.

About CoStar News

Finance Editor, CoStar News
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