Orion fund buys into Colonial’s debt package

Orion Capital Managers has bought a position in the restructuring of Spanish property company Colonial, in its first deal since closing its third opportunity fund.

Funds managed by Orion, and US opportunity fund Colony Capital, have agreed to acquire Goldman Sach’s €1.5bn portion of the €4.2bn syndicated loan in Immobiliaria Colonial at a discount.

A statement from the two real estate private equity managers said they were “supportive of the current restructuring process” and had confidence  in its management.

The other banks in the syndicate are Eurohypo, Calyon and Royal Bank of Scotland, which plans to exit the overseas loans made by its Global Banking and Markets division over the next three to five years.

Orion is said to be particularly interested in the value in Sociétié Foncière Lyonnaisse, in which Colonial has a large stake. SFL also owns Spanish retail developer Riofisa.

Orion European Real Estate Fund III raised an additional €380m at its final closing this month, taking its total equity from €900m to €1.28bn.

It has already spent €300m of equity, its biggest deal being the €235m acquisition of Plenilunio shopping centre in Madrid from Santander’s real estate fund, for a large discount to book value.

Credit Suisse Securities’ placement team advised Orion on the capital raising, which Orion founding partner Bruce Bossom said had taken more than 15 months, “when before [the credit crunch] it would have taken under nine”.

Colony is investing in Colonial through Colony Investors VIII and Colyzeo Investors II.