BofAML and Citi lead end of year European syndication surge

Bank of America Merrill Lynch and Citi have closed the syndication of a €325 million Deutsche Interhotels loan in an oversubscribed deal, Real Estate Capital can reveal.

The syndication is one of a string that big banks are working on closing before the year end. Financial market volatility over the summer has not put off the deepening pool of banks, institutions and debt funds that want to buy CRE loans, they say.

AXA Investment Managers – Real Assets and M&G Investments have each taken about €100m of the Interhotels deal, with three other accounts taking smaller participations.

The senior loan at 60% loan-to-value financed Starwood Capital and Brookfield Asset Management’s €550 million acquisition of the 3-5 star, 10-asset hotel portfolio out of administration.

Four large hotels, all in the former East Germany, account for 80% of the portfolio’s value. They are the Westin Grand Berlin, Park Inn in Berlin’s Potsdamerplatz, the Westin Bellevue in Dresden and the Westin in Leipzig.

Citi has almost completed the sale of about €380 million of the senior debt in a €650 million whole loan written to refinance Ceberus’s German Metro stores portfolio, Project Blue.

Real Estate Capital reported in May that BlackRock and Highbridge took Blue’s €170 million mezzanine tranche. Since then, Citi has brought in Deutsche Asset & Wealth Management and Santander as partners and has been in talks with two German banks.

Citi and underwriting partner Morgan Stanley are also meeting clients interested in participations in £800 million of the £1.5 billion loan the pair provided to Lone Star to acquire UK NPL portfolio Project Churchill from Aviva in September.

The debt is expected to be syndicated to a small group of large investors; JP Morgan has already taken a €200m participation after also acquiring a £200m portfolio of performing Churchill loans from Lone Star.

Meanwhile Deutsche Bank has syndicated most of a c€430m underwrite, secured on three Italian shopping centres owned by the Balkany family’s LSGI (La Societe General Immobiliere).

The strong sponsor and 10-year tenor loan was particularly attractive to European insurance companies. AXA and Allianz are believed to be the buyers with the bank keeping a small hold.

AXA has continued to be very active in recent months in the secondary loan market after closing a new senior debt fund with €2.9 billion of equity in July.

As well as the Italian loan and Interhotels loans, the French fund manager also acquired a £250m participation in Q3 in the £390m loan which Citi and Lloyds made to Greystar and PSP, secured on the Nido student housing portfolio.

Meanwhile, ING is working on more than six syndications, the largest being a €650 million loan for AEW Europe and China Investment Corp’s French, Belgian and Dutch Celsius retail portfolio.

See the special feature on European syndication in November’s magazine