Blackstone has selected a party to refinance its £760m Mint Hotels portfolio, Real Estate Capital can reveal.
JP Morgan has agreed to provide the loan for Blackstone, which kicked off a search for £550m of finance early last month by appointing Eastdil Secured.
The deal, one of the largest single underwrites this year, allows Blackstone to reduce the cost of its existing debt and take cash out of the deal, a strategy being pursued by other big ticket borrowers also looking to take advantage of the competitive financing market.
The financing mandate reflects a 72.4% loan-to-value. It is thought that the margin for the deal was slightly under 250 bps above LIBOR.
The loan replaces an arrangement that was due to expire in 2016. A £375m package was closed in 2011 with a £300m senior loan from Deutsche Bank and a £75m mezzanine tranche from DRC Capital. The senior debt was reported at the time to have been priced at 300 bps over LIBOR.
Blackstone bought the portfolio of eight hotels for around £600m from Lloyds Banking Group, the bank having taken control of the assets after a breach of covenant on its £450m loan to the company. The portfolio includes: two hotels in London, in Westminster and near the Tower of London; and one each in Birmingham, Manchester, Leeds, Bristol and Glasgow; plus one in Amsterdam.
In August the owners of The Savoy in London’s West End, Kingdom Hotel Investments and Lloyds Banking Group, employed a similar strategy by agreeing an early refinance – putting in place £300m of debt, comprising £200m of senior from Deutsche Bank and £100m of mezzanine from Apollo Global Management – only 18 months after its existing finance was arranged with Crédit Agricole CIB and DekaBank.
In May Starwood Capital refinanced its Principal Hayley regional hotel business with a £330m loan with Morgan Stanley, just 15 months after it bought the hospitality company for £360m with £200m of debt from Citigroup.
JP Morgan’s largest deal this year was the purchase of Commerzbank’s Project Octopus – a portfolio of €4.4bn of Spanish loans – alongside Lone Star. JP Morgan took on half of the loans, which were performing, and Lone Star took on the unperforming 50%.
The US bank also formed part of a syndicate – alongside Bank of America Merill Lynch and Deutsche Bank – that provided a three-year unsecured corporate facility for Kennedy Wilson Europe Real Estate in September