Two North American banks are in line to back Lone Star in its £1bn portfolio acquisition from Moorfield Group, Real Estate Capital can reveal.
Wells Fargo and Royal Bank of Canada are in advanced discussions to provide a loan of around £700m.
The Texan investor’s push into secondary property has been matched by a desire from banks to increase lending in non-prime markets where they can achieve higher returns.
The portfolio is made up almost all of the remaining properties in Moorfield Real Estate Fund I and Fund II, with the vehicles coming to the end of their lives. It includes retail, office, hotel, residential and student accommodation assets. Among them are 44 Shearings Hotels, a stake in the Brindleyplace office estate in Birmingham, the Pinnacle in Leeds and Skypark (pictured) in Glasgow.
Wells and RBC are understood to have agreed a loan of around four years at a 70% loan-to-value. The margin is thought to be between 250 and 300 bps. The deal is expected to close in mid-February.
Moorfield will continue to asset manage the portfolio post completion alongside Lone Star’s own asset manager, Hudson Advisors.
Both Wells and RBC have close ties with Lone Star. In July 2013 Lone Star bought the £1.3bn non-performing element of the £4bn former Eurohypo UK lending book from Commerzbank, funded by Wells, which itself bought the performing book and took on the team.
At least one of the two lenders have supported Lone Star in most of its European non-performing loan purchases since 2011, including projects Royal, Excalibur, Holly, Rock and Salt.
PWC acted for both Lone Star and Moorfield.
All parties declined to comment.