Paris debt deals: BAWAG takes third of mezzanine on BAML’s Coeur Défense debt

Bank of America Merrill Lynch has syndicated around a third of the €130m mezzanine debt secured against the Coeur Défense tower in Paris to Austrian bank BAWAG. BAML underwrote a €935m whole loan in February for Lone Star’s €1.35bn purchase of the iconic building. The five-year financing was structured as a senior loan with a 60% loan-to-value ratio and a mezzanine facility with an LTV ratio of up to 72%.

AXA Real Estate owns an equal, €44m share of the mezzanine tranche as part of its €318m participation in the whole loan across both tranches, secured at the time the deal closed. The margin on the mezzanine is around 700 basis points. BAML plans to sell down more of the senior loan, but sources said a number of French banks, Aareal Bank and French debt fund Acofi had decided against it.

One source said: “It’s an attractive asset but one issue is that the structure is not advantageous for senior lenders because insolvency rights are diluted for the senior.” There is also only three years left before the final lease breaks on the space. BAWAG, which targets deals with margins of at least 400bps, recently acquired from Lloyds £50m of a £225m loan made to Quercus Healthcare Property Partnership. It also participated in Nomura’s loan-on-loan finance for Cerberus’s acquisition from NAMA of Project Eagle, a portfolio of Northern Irish distressed loans.