US private equity group Lone Star has completed the purchase of the £900 mln (EUR 1.08 bn) Project Royal UK secondary commercial property loan portfolio from Lloyds Banking Group. Financial details were not disclosed but the portfolio is believed to have been sold at a 40% discount to face value.
US private equity group Lone Star has completed the purchase of the £900 mln (EUR 1.08 bn) Project Royal UK secondary commercial property loan portfolio from Lloyds Banking Group. Financial details were not disclosed but the portfolio is believed to have been sold at a 40% discount to face value.
The deal, which was made on behalf of Lone Star's Real Estate Fund II, was funded with £300 mln of senior debt provided by Citigroup and Royal Bank of Canada.
The portfolio comprises a mixture of 35 non-performing, defaulted and performing loans secured by UK secondary office, retail and industrial commercial property.
Richard Dakin, managing director Lloyds' Corporate Real Estate Business Support Unit (CRE BSU), said: 'We have continued 2010's momentum in deleveraging our corporate real estate loan book throughout 2011, despite what has been a significantly more challenging environment for property transactions.'
Angus Dodd, managing director, UK Real Estate, at Lone Star Management Europe, advisor to the Lone Star Funds, said: 'We are confident of the ability of the Lone Star Funds to deliver constructive solutions to banks and, as further de-leveraging takes place in the property sector, the Lone Star Funds are well-placed to invest in further opportunities as and when they arise.'
Hudson Advisors, a subsidiary of Lone Star, will provide the loan servicing and asset management for the portfolio.
