Blackstone, Ivanhoe Cambridge buy more Gecina debt

US group Blackstone and Canadian firm Ivanhoé Cambridge have increased their share of Gecina's debt to nearly 65%, paving the way for an equity stake in the French REIT.



The move follows an initial acquisition by the two parties in November 2012 of a 40% stake in loans made to Gecina, representing a potential 12% stake in the Paris-based office landlord.

Blackstone's Real Estate Partners Europe III fund and Ivanhoe Cambridge, which forms part of Caisse de Depot et Placement du Quebec, acquired the bank loans made to two of Gecina’s largest shareholders, Joaquin Rivero's Alteco Gestion y Promocion de Marcas, S.L and Victoria Soler's Mag-Import.

The highly-leveraged credit facilitiy was provided by 13 European banks in May 2006 and is secured by Gecina’s shares. Most of the lenders involved are cash-strapped Spanish banks and cajas looking to diminish their exposure to real estate. It is believed that French lenders Natixis and Société Générale are also part of the consortium.

The loan, with a nominal value of €640 mln, is likely to have traded for a large discount to value, similar to past debt transactions seen in Europe.

Rivero, who is Gecina's former chairman and CEO, and his partner Soler filed for creditor protection in October last year following the collapse of refinancing talks with the creditor banks. They had pledged their combined 31% stake in the Paris office real estate investment trust as collateral for the loans.

'This sounds like a great opportunity to steer a company which is in a state of transition, and which offers potential value creation,’ well-informed market sources told PropertyEU. Gecina changed management in October 2011 and announced a new strategy aimed at further diversifying its portfolio and increasing the share of alternative assets.

The deal is the third investment into a European listed property company by a private equity player in the recent past. At end-2009, Colony Capital and Orion Capital Managers acquired Goldman Sachs' portion of the approximately €4.2 bn syndicated loan in Inmobiliaria Colonial. And in the UK, Area Property Partners launched a €230 mln bid for developer Minerva.

However, in Gecina’s case what is at stake is over 30% of the capital of a much larger real estate investment trust. By getting control of the loan the parties will likely be able to decide what will happen to the shares, according to whose who track the market. 'Clearly they would go for immediate recovery of the stocks,’ sources said.