GLOBAL – The vehicle set up by US private equity firm Starwood to exploit opportunities in the European debt market has closed its first deal to provide mezzanine debt as part of the £547m (€673m) refinancing of the Maybourne Hotel Group.
Under the terms of the five-year deal – secured against three super-prime central London hotels – Starwood European Real Estate Finance (SEREF) will provide £19m of £147m in mezzanine debt.
Its New York-listed REIT counterpart, the Starwood Property Trust, will provide an additional £30m.
In a note to the market, SEREF said the loan-to-value ratio was "in the low 50s percent".
According to its prospectus, SEREF could accept loan to value of as much as 70%.
The firm, which raised £230m in its December IPO on the London Stock Exchange, intends to invest across the capital stack in a diversified portfolio, including senior debt.
RBC and Wells Fargo are understood to have been the senior lenders in the deal signed this week.
Although the targets are not fixed, SEREF expects whole loans and subordinated debt each to account for 40-50% of the portfolio, and other debt – such as bridge loans – to account for up to 20%.
The percentage of development loans is capped at 25%.