Selling down debt and assets will cut Blackstone fund’s IERET exposure to €35m
Blackstone Real Estate Debt Strategies aims to syndicate €100m of the €220m, multi-jurisdiction loan it made to Invista European Real Estate Trust in April. BREDS will retain about €120m of the relatively high-cost, high loan-to-value IERET facility, secured against mainly French and German distribution assets.
BREDS’ exposure will fall to €35m after asset sales by IERET’s investment manager, Internos Global Investors, as part of a recovery strategy. BREDS is believed to have lined up several syndication partners, from traditional European lenders to debt funds and large US investment banks.
The BREDS loan is for three years, with an option to extend for two 12-month periods, and an initial margin of 770 basis points over three-month Euribor. But this will fall to 470bps once the loan is cut to €135m and the loan-to-value ratio falls under 70%. The BREDS refinancing allowed IERET to repay original lender Bank of Scotland on the loan’s 30 April maturity date.
The original loan, held by Lloyds, was the largest among Lloyds’ €750m Project Charlie loan portfolio, sold to Cerberus in November as part of the
€1.5bn Project Hampton sale. Lloyds kept the performing loan on its books even though Cerberus was deemed the loan’s economic beneficiary.
In December Lloyds granted IERET a four-month loan extension, during which period Internos secured new financing from BREDS to repay the bank. IERET fund manager Ludovic Bernard said: “We used the extension to find a new lender, as falling into the hands of Cerberus wasn’t attractive for our shareholders; BREDS was not only more competitive but more of a partner as well.”
To support a refinancing, Internos split the 35 assets into two pools: €90m, which IERET is selling, and €210m, which it is keeping. “We approached BREDS with that, who knew the portfolio well,” he said. Blackstone was in Project Charlie’s second-round bidding.