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Debt funds take €150m Blanchardstown mezzanine from Morgan Stanley

Morgan Stanley has syndicated about €150 million of mezzanine debt secured on Ireland’s Blanchardstown regional shopping mall near Dublin with two debt funds, Real Estate Capital can reveal.

Morgan Stanley has syndicated about €150 million of mezzanine debt secured on Ireland’s Blanchardstown regional shopping mall near Dublin with two debt funds, Real Estate Capital can reveal.

DRC Capital and Goldman Sachs are splitting the mezzanine participation 50:50, DRC for its European Real Estate Debt Fund II and Goldman for global debt fund Broad Street Real Estate Credit Partners II.

Goldman’s investment is due to close imminently, while DRC’s is thought to be one of a handful of deals that the debt fund manager closed for ERED II in the last quarter of 2015.

The mezzanine is believed to be priced at an internal rate of return of about 7.5 percent.

Morgan Stanley won the mandate to refinance the 1.5 million square foot centre for sponsor Green Property early last year after a process run by Eastdil Secured.

The US investment bank arranged and underwrote a €747 million whole loan in what is probably the largest debt financing in Irish real estate since the financial crisis.

Two of Green Property’s Irish relationship banks, AIB and Bank of Ireland, took significant participations in the senior loan and also took a €10 million participation in the mezzanine tranche. Morgan Stanley is believed to have also retained a significant portion of the senior debt which priced at a margin close to 200 basis points.

The whole loan represented a relatively high 83 percent loan-to-value at the time it was drawn last year, but there has since been some amortisation.

Blanchardstown low resBlanchardstown is one of four regional shopping centres located around the ring road on the outskirts of Ireland’s capital and it includes a Crowne Plaza hotel, offices and leisure facilities as well as about 1 million sq ft of retail.

Morgan Stanley is one of the most active debt providers in the Irish market among overseas lenders there, financing both real estate and non-performing loans.

DRC Capital’s £487 million ERED II is now all but fully invested and the firm has recently started fund raising for its next high-yield debt fund.

It is thought that ERED III will continue with the same investment strategy, focusing on whole loan and mezzanine opportunities in the UK and Western Europe.

DRC is just one of several debt fund managers who have begun fresh capital raises for Europe after they successfully invested 2014 vintage funds and mandates through 2014 and 2015. Lasalle Investment Management and Pramerica Real Estate Investors are also in the market capital raising.

And Blackstone has begun looking at deals for a third, global Blackstone Real Esate Debt Strategies fund after kicking off capital raising in Q3 2015.

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