US private equity fund Lone Star has completed the acquisition of a diversified portfolio in the UK for around £1 bn (€1.3 bn) with senior debt financing from RBC Capital Markets and Wells Fargo.
US private equity fund Lone Star has completed the acquisition of a diversified portfolio in the UK for around £1 bn (€1.3 bn) with senior debt financing from RBC Capital Markets and Wells Fargo.
The sale of the portfolio, which was held by private equity fund manager Moorfield's two property funds - Real Estate Fund and Real Estate Fund II - was initially announced in December last year. Lone Star is making the purchase on behalf of its Fund III.
The portfolio, dubbed Project Laser, comprises both retail and office secondary properties as well as alternative assets including hotels, residential and student accommodation. Moorfield will retain an asset management role, alongside Hudson Advisors.
Marc Gilbard, CEO of Moorfield Group said: 'This is the largest transaction that Moorfield has undertaken in its corporate history and is a very effective way for MREF and MREFII to dispose of the majority of their investments.'
The transaction was completed off-market with Doherty Baines acting on behalf of Lone Star. Herbert Smith Freehills and PwC acted for Moorfield and Allen & Overy, Pinsent Masons, Shoosmiths and PwC acted for Lone Star.
Moorfield raised £265 mln in equity for MREF in 2005 and £389 mln for MREFII in 2007.
'We are very pleased with the investment performance this will give to our investors and it allows us to focus on optimising the value of the remaining assets in these funds together with investing our recently raised MREFIII,' added Gilbard.
Moorfield completed its final close for Moorfield Real Estate Fund III earlier this month with £250 mln of discretionary equity capital commitments and over £100 mln of co-investment equity capital commitments, which combined provide MREFIII with more than £350 mln of equity capital for investment.
Moorfield will supplement this equity with joint venture capital, bringing the fund's total firepower for the next three years to £500 mln.
MREFIII is a UK-focused opportunistic/value-add fund with a targeted risk adjusted internal rate of return (IRR) of 15-20%. The MREFIII investor base consists of a group of investors split broadly equally between existing and new relationships with the investors coming from the US, Europe and Japan.
The portfolio acquired by Lone Star includes the following assets:
The Salisbury in the City of London
Pinnacle in Leeds
Towers business park in Manchester
Skypark business park in Glasgow
40% interest in the Brindleyplace office portfolio in Birmingham
Velocity Village development in Sheffield
50% stake in Sovereign Reversions
residential equity release portfolio
Mercure & MGalleries hotel portfolio
Shearings hotel portfolio
Domain student accommodation in Winchester
