GE Capital Real Estate has won the mandate to finance Blackstone’s Project Tower, the Micheal O’Flynn UK and Irish commercial property loan portfolio, with a €770m five-year loan-on-loan facility.
The financing mandate was competitive, with underbidders including at least four investment banks, comprising Citigroup, Morgan Stanley, Credit Suisse and JP Morgan.
GE Capital Real Estate’s loan is tranched in euros and sterling in line with the underlying property portfolio which is outlined below.
Blackstone acquired Project Tower from NAMA in April paying €1.1bn for the remaining €1.75bn book. Lone Star and Davidson Kempner were underbidders.
Earlier, at the end of March, a €100m tranche was siphoned off and traded to Kildare Partners, the newly-launched private equity fund backed by Ellis Short, for around €30m. UBS sold Project Tower on NAMA’s behalf.
CoStar News understands that GE Capital Real Estate has agreed a five-year facility priced in the low 300 basis points range.
GE Capital Real Estate has accelerated its lending ambitions in the last 12 months, with the catalyst of its growth in lending stemming from last November’s acquisition of Deutsche Postbank’s £1.4bn UK commercial property loan book, co-incidentally also dubbed Project Tower.
Blackstone’s workout of the Project Tower will comprise a combination of strategies including consensual restructuring and refinancings.
The original €1.85bn Project Tower was comprised of three sub-pools:
- a €266m performing pool secured by a UK-led student accommodation portfolio, comprised of 11 assets in the UK and one each in Germany and Spain. The loans mature in March 2018;
- a €540m sub and performing pool secured by 23 UK investment properties, five UK development schemes and six German investment properties. The majority of the loans mature in March 2018, while a smaller pool of underwater UK-secured loans mature between March 2014 and March 2016;
- a €1.02bn sub and non-performing 21 investment properties, 67 residential and commercial developments and 27 landbanks throughout Ireland. Kildare’s €100m loan tranche was within this third subpool.
Project Tower’s student accommodation pool is comprised of 5,531 UK beds in halls of residences across Manchester, Newcastle, Birmingham, Liverpool, Glasgow, Leicester as well as Cardiff and beyond. In addition, there is 587-bed student accommodation block in Valencia and a 284- Bremen asset.
The second €540m loan pool is comprised of 15 UK offices, including 130 Jermyn Street, where anchor tenant National Grid has a break clause in two years; the 108,000 sq ft Stockley Park in Heathrow entirely let to Mark and City West One office park in Leeds majority let to Capita Financial Group.
In addition, there are three UK retail assets, including the Aylesham Centre, and two industrial assets, two hotels and one warehouse in Livingston
Among the five UK development schemes are a 10-acre mixed-use scheme in Glasgow, called Scotland Street, and a 6.5-acre industrial scheme in Portsmouth. The German investment portfolio is comprised of two retail assets, two mixed-use and an office and industrial asset.
Project Tower’s original €1bn Irish sub-pool includes 18 investment properties in Cork – comprised of nine retail assets, the Ballincollig Shopping Centre, six offices and two mixed-use assets.
There are 50 commercial developments and 17 residential developments spread across predominantly Ballincollig, Cork, Crosshaven and Mallow. Among the residential developments is the landmark Elysian Residential scheme in Cork, which O’Flynn only managed to complete in September 2008 – just as Ireland’s dramatic market collapse set in.
Project Tower also includes an enormous land bank which, including of the tranche sale to Kildare Partners, totalled 1,158-acres spread across throughout Cork, Dublin, Mallow, Kerry and beyond.
Blackstone and GE Capital Real Estate declined to comment.