Citi has financed the purchase of a £1bn non-performing loan portfolio for Cerberus Capital Management, Real Estate Capital can reveal.
The bank has written a cheque of around £500m for the loan-on-loan deal to fund the acquisition of Project Carlisle from Nationwide.
Cerberus paid close to £680m for the £1bn UK book, putting the loan-to-value of the loan in the region of 75%. The margin on the debt is around 300bps.
Carlisle comprises 115 loans secured against 176 properties. The majority of the loans are already subject to an insolvency process meaning that Cerberus will be able to gain control of the property in a relatively straightforward manner.
The portfolio includes debt held against F&C Reit’s Star City leisure complex in Birmingham; 51 Eastcheap in the City of London, previously owned by City Site Estates and now managed by Stanhope and Frogmore’s Port Arcades in Ellesmere Port.
The deal with Cerberus is a new relationship for Citi which already has close ties with loan-buying private equity firms Blackstone, Lone Star and Oaktree Capital Management.
Last year Citi was one of a trio of banks that backed Lone Star in its NPL purchases from IBRC, including the £5.2bn Projects Rock and Salt as well as Lone Star’s portion of the €9.3bn Project Stone. It is expected that Citi will look to fund more non-performing loan portfolios this year, particularly those being sold by NAMA secured by Irish collateral.
Citi’s other deals in 2014 included a £300m loan to Ares and Delancey to refinance The Walbrook in the City of London, which is currently up for sale; a number of deals for Blackstone’s logistics platform, Logicor both in the UK and on the Continent; and more than £200m of loans for Greystar as it bought up elements of collapsed student housing investor Opal Group.
Citi declined to comment. Cerberus was unavailable for comment.
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