BREDS and BXMT separately close £411m in hotel-backed whole loans for KSL Capital and Sankaty Advisors

Blackstone Real Estate Debt Strategies (BREDS) has provided KSL Capital Partners with a £315m whole loan to finance the US private equity group’s £485m acquisition of the final tranche of De Vere Group’s UK mid-market Village hotel chain.

KSL went under offer to acquire the 28-strong hotel portfolio from Lloyds Banking Group in late October, as revealed by CoStar News, heading off competition from underbidders including Great Eagle Group, one of Asia’s biggest property groups.

The sales process, dubbed Project Runner, was launched in summer managed by JPMorgan and with an initial guide price of £450m.

BREDS is expected to carve up the whole loan – which reflects a 64.9% loan-to-cost (LTC) – and distribute the senior portion and retain a mezzanine tranche.  The senior facility is expected to reflect a 50% LTC, equating to £242.5m, while the mezzanine tranche will be around £72.5m.

Lloyds acquired the De Vere hotel portfolio in March 2010 after swapping £650m of debt for preference shares in Alternative Hotel Group, the former owner of the De Vere Group, in what was then one of the largest debt-for-equity swaps in UK corporate history.  Lloyds’ full ownership was completed in September 2012.

The De Vere Villages comprises around a 3,500 room over 28 hotels located in suburban locations across the UK.  The portfolio includes three hotels under construction in Aberdeen, Edinburgh and Glasgow.

KSL’s De Vere hotel portfolio purchase is one of two monster UK hotel portfolio sales in the second half of the year.

Back in August, the owners of Travelodge – Goldman Sachs, GoldenTree Asset Management and Avenue Capital Group – acquired a tranche of 144 Travelodge hotels they did not own for around £520m from a consortium led by Prestbury Investment Holdings as well as Tom Hunter’s West Coast Capital and the Reuben Brothers’ Aldersgate Investments.

In an entirely separate deal, Blackstone Mortgage Trust (BXMT), the private equity group’s US-listed mortgage REIT, originated a £96m whole loan to finance Sankaty Advisors and Canyon Capital Advisors’ £160m purchase of six De Vere Hotels and De Vere Luxury Lodges.

The BXMT whole loan reflects a 60% LTC.  The six conference, golf and leisure hotel resorts comprise 850 rooms and were added to the joint venture partners’ QHotels luxury hotel business, acquired from the IBRC Project Rock loan portfolio sale, managed by special receivers KPMG.

The QHotels loan tranche was the only hotel tranche in Project Rock which Lone Star did not win.

The six hotels comprise: Cameron House; Dunston Hall; Oulton Hall; Mottram Hall; Slaley Hall; and Belton Woods, expanding the QHotels portfolio to 27 hotels.

At the end of last month, BXMT reported that its US and European real estate loan book had risen to $3.9bn.

In the earnings call at the time, Stephen Plavin, president and chief executive officer of BXMT, said: “In Europe, we continue to expand our origination footprint given the favorable market dynamics and credit conditions that exist there, as well as Blackstone’s strong presence and track record in the region in equity real estate.

“In terms of the competitive environment, we’re seeing high levels of competition in certain segments of our market-primarily for loans on more stable properties that can be executed in the bank or CMBS markets.

“However, market conditions remain favorable for the transitional assets that we target- especially for loans in excess of $150m or that require quick and definitive execution.”

jwallace@costar.co.uk

About CoStar News

Finance Editor, CoStar News
This entry was posted in Lenders, Market Trends, Mezzanine, Private equity real estate, Refinancings and tagged , , , , , , . Bookmark the permalink.

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