Blackstone Real Estate Debt Strategies (BREDS) has carved up the €222m whole loan which refinanced Invista European Real Estate Trust (IERET) just over three months ago and sold a €100m senior loan to Bank of America Merrill Lynch (BAML).
For IERET, the open-ended listed core European commercial property trust managed by INTERNOS, this completes a 12-month period of musical chairs of its creditors.
Last September, Lloyds Banking Group parcelled IERET’s €249.6m senior loan into Project Charlie, a subset of Project Hampton, which was sold to Cerberus Capital Management in November.
In advance of which, IERET negotiated with Bank of Scotland, the wholly-owned Lloyds Banking Group subsidiary which owned the legacy senior debt, a four-month loan extension to 30 April this year to consent to Lloyds transferring ownership of the facility.
Just over six months after Cerberus’ acquisition of Project Charlie, on the final day of the four-month extension, BREDS refinanced Cerberus’ outstanding senior debt with a fresh €222m whole loan.
Completing the creditor musical chairs, the Board of IERET today announced that BREDS has divided the whole loan into a €100m senior, sold to BAML, and a €122m mezzanine facility, retained by BREDS.
The two facilities run for three years, to end of April 2017, with two 12-month extension options, subject to adherence to business plan objectives.
The blended whole loan margin is 770 basis points over three-month Euribor.
IERET is comprised of 30 diversified commercial properties predominantly throughout France and Germany as well as Spain, Netherlands and Belgium, valued at €299.7m by Savills as at 31 March.
Subsequent to which, IERET sold a vacant logistics asset, Modletice, in the Czech Republic for €6.5m, reflecting a 3.9% discount to valuation, and reducing further the outstanding debt by €6.2m.
Based on the carrying valuation of Modletice, IERET’s portfolio would proportionally now reflect a €292.95m valuation.
Against which, BAML’s senior loan reflects a 34.1% LTV while BREDS mezzanine loan takes the portfolio to 75.8% LTV, according to CoStar News calculations.
Pricing of the senior and junior loans is thought to be between 200 bps and 250 bps and 12%-12.5% IRR, respectively, according to estimations provided to CoStar News.
However, IERET has agreed a 300 bps reduction in the blended whole loan margin to 470 bps once the BREDS €122m mezzanine loan is reduced to €35m, subject to the overall LTV being below 70%. At this stage, the margins would recalibrate accordingly.
As such, the proceeds of the agreed 13 targeted asset disposals will be applied to the repayment of the mezzanine facility, with the blended cost of debt to the company remaining at 770 bps over three-month Euribor until the step down event has been reached.
All parties declined to comment.