Highbrook Investors has completed the recapitalisation and acquisition of the €615 mln Dutch Mesdag Delta portfolio in an off-market transaction with landlord Breevast.
The deal, which was structured and closed with the New York-based investment fund within a month, means Breevast has repaid the remaining debt tied up in the Mesdag Delta CMBS, averting foreclosure on Breevast's 56-property strong Dutch portfolio.
Hedge fund Davidson Kempner Capital Management, also based in New York, took control of the CMBS in February of this year with a price tag of €615 mln and subsequently announced plans to sell the 56 underlying properties.
As a result of the sale to Highbrook, the planned foreclosure sale on 15 May 2018 will not take place.
Value-add portfolio
The portfolio consists of 56 assets spread throughout the Netherlands totalling 456,000 m2. It includes 18 office buildings, 16 industrial properties, nine shopping centres, six high street stores, a hotel, two residential properties and a plot of land. Over 50% of the portfolio is located in Amsterdam and nearly 70% is located within the greater Randstad area. The portfolio is said to have an occupancy rate of 77% with annual rents of €41 mln.
HighBrook said earlier this month that it had entered into a binding and unconditional agreement with Breevast to acquire and recapitalise the assets. The announcement came shortly after Breevast lost a court injunction to prevent the sale by US hedge fund Davidson Kempner.
As part of the deal, Breevast retains full responsibility for the property, asset and development management of the portfolio. Loyens & Loeff and Bryan Cave Leighton Paisner acted as advisors for HighBrook Investors in this transaction. Breevast was advised by Dentons Boekel and CMS. BNP Paribas Real Estate was deal advisor to both HighBrook Investors and Breevast.
Growing platform
This transaction marks HighBrook’s 12th investment on the Dutch market within the last 18 months. The firm has now acquired nearly 100 properties totalling 620,000 m2 throughout the Netherlands and said that it is actively working on multiple pending transactions. These include the acquisition of the iconic Groothandelsgebouwen in Rotterdam.
Breevast ran into difficulty in recent years because of loan defaults caused by a sharp drop in the value of the underlying assets. At the market peak, in late 2006, Breevast refinanced the property portfolio for €680 mln, then securitised it and sold the units to investors in July 2007, largely via the Irish stock exchange. Five years later, when the CMBS came to maturity in December 2016, Breevast failed to pay back investors and Situs was appointed as special servicer for the CMBS structure, which was largely owned by Davidson Kempner.
The special servicer in February opted for a sale of the assets.
