EUROPE - A global opportunity fund run by Morgan Stanley Real Estate Investing has provided €150m in mezzanine financing to BRE/Hospitality Europe Holding, an owner of a European hotel portfolio.
Morgan Stanley Real Estate Fund VII Global (MSREF VII) made the debt investment as part of a refinancing of the company with its five senior lenders.
As part of the deal, the five-strong bank syndicate - involving Aareal Bank, Citibank International, Deutsche Post Bank and ING Bank - reduced its senior lending position from €480m to €330m.
BRE/Hospitality Europe Holding owns nine upscale hotels across Europe, including operators Starwood, Hilton and Hyatt, is itself owned by two of Blackstone Real Estate Partners' funds: BREP International Fund II and BREP Fund V.
The debt restructuring was completed at the end of November by Citigroup Global Markets and ING Real Estate Finance, which acted as joint coordinators and joint book-runners of the mezzanine facility.
The restructuring involved the bifurcation of a €480m original senior facility into a €330m senior facility and a newly created €150m mezzanine facility, taken on by MSREF VII.
MSREF VII is the latest active opportunity fund of Morgan Stanley's real estate investment arm and includes among its investors the China Investment Corporation (CIC) sovereign wealth fund.
The restructuring extends the maturity of the company's debt by five years and is designed to enable it pass through the low point in the hotel cycle to benefit from a future recovery.
The portfolio, which comprises 3,423 rooms in Amsterdam, Brussels, Frankfurt, Paris, Prague and Stockholm, has enjoyed a significant pick-up in trading conditions and financial performance in 2010.