Lone Star and Westbrook are set to “make a fortune” from the imminent sale of a €145m senior debt position secured against the ‘Mozart’ portfolio, formerly owned by Morgan Stanley, according to a source.
The partners have held talks with investors including Centerbridge, Pimco and Och- Ziff and the deal is now in the late stages, the source said.
A heavy discount on the sale is unlikely, given that the debt was originally bought from Credit Suisse in 2009 at a deep discount to its then €193m par value.
Its face value has fallen as a result of 51 asset sales out of the total 110 German offices, retail and hotel properties originally in the whole portfolio. Morgan Stanley is no longer involved with the properties, which were recently valued at €452.76m.
CR Investment Management took over their asset management last year and has sold 23 properties at above their valuations, in cities including Frankfurt, Stuttgart and DÃ¼sseldorf.
The debt Westbrook and Lone Star are selling represents 25% of the interest in a larger €581.7m senior loan, with the other 75% (€436.7m) being held in the Talisman 7 CMBS. There is also a €113.4m junior loan, meaning the total debt is €695.1m.
The securitised Mozart loan is the largest of nine in the €794m Talisman 7 CMBS and matures in April 2015. Lone Star’s loan servicing business, Hudson Advisers, is running the sale.
The source said: “Lone Star and Westbrook feel they have got to a point where they have taken money off the table but where significant further upside remains, such that the position is attractive to a new buyer.”