Benson Elliot buys CMBS default assets

Special servicer of defaulted CMBS loan auctions 3,000 German homes to private equity group

Benson Elliot has bought a German housing portfolio in one of the first asset purchases from a defaulted German CMBS loan.

The private equity group bought 3,000 TOR portfolio homes via a sale of the defaulted CMBS loan, directed by special servicer Hatfield Philips International and receiver Ernst & Young.

“This is one of the first portfolios where a special servicer has resolved a CMBS through an auction,” said Benson Elliot senior partner Trish Barrigan.

Last October, the same special servicer, Hatfield Philips, rejected a bid by Corestate to buy 5,236 units underpinning the Velvet loan in Titan Europe 2006-2. Corestate had teamed up with the Danish borrower and offered to buy the debt at a 10% discount.

Over 60% of the 80 properties in the TOR portfolio are in Berlin. The loan’s principal balance was €187m, but the price Benson Elliot paid hasn’t been revealed.

“These are very complex deals and a number of factors besides pricing lead special servicers to chose the parties to take it forward,” Barrigan said.

She cited Benson Elliot’s track record in buying assets out of receivership and its 2010 investment in the 700-home Silvertower Berlin portfolio.

“Our ability to execute that in a timely manner made us an interesting buyer,” she said. Landesbank Berlin is providing debt for the purchase.

“We have been looking at the German residential sector for some time,” Barrigan added. “It’s an attractive investment as prices are rising from a very low base.

“With our active management strategy, we should be able to increase the rental value and occupancy to create additional value from residential portfolios.”

The TOR portfolio was part of the holdings assembled in 2006 by AIM-listed Speymill Deutsche Immobilien and had been financed in 2007 with a CMBS loan in the €667.7m MESDAG (Charlie) issuance, which included eight other loans.

It was put into special servicing with Hatfield Philips after defaulting in November 2010. Shortly afterwards, Speymill Deutsche’s lenders put all its property-holding subsidiaries into receivership.

James Jakeman and Georg Strassner have joined Benson Elliot to originate UK and German deals respectively. Strassner was previously at Strategic Value Partners and will work alongside Philipp Braschel, while Jakeman, who will work with Phil Irons, joins from Société Générale.