12/14/2012

Goldman, Blackstone Scoop Up Lloyds Loans

Goldman Sachs and Blackstone walked away with $524 million of commercial real estate debt last week as Lloyds Banking auctioned off loans it inherited from Bank of Scotland.

Goldman was the winning bidder for a pool of 14 performing notes backed by various property types. The bank paid about 90 cents on the dollar for just over $430 million of participation interests in senior mortgages, which was in line with the sellerís expectations.

Blackstone achieved a greater discount as it snagged a defaulted mortgage on a luxury condominium high-rise in Stamford, Conn. The New York fund operator paid an undisclosed price for the loan, which has a balance of about $90 million.

Both transactions closed this week, marking one of the biggest loan sales of the year. The auction, run by Eastdil Secured, disposed of nearly all the remaining assets in Bank of Scotlandís U.S. loan book. About 10 bidders participated in the final round, including Lone Star Funds of Dallas. H/2 Capital, a Stamford fund shop, also showed substantial interest in the offering, though it isnít known if the firm was in the final round.

The loans acquired by Goldman were only available as a package. The collateral is an assortment of land, hotels, apartment complexes and office buildings. The debt has a weighted average loan-to-value ratio of roughly 65%. The weighted average remaining term is about 19 months, and the weighted average coupon is about 3.75%. Two-thirds of the loan balance is backed by properties in or around New York, Washington, Boston, Los Angeles and Chicago.

The largest loan in the pool is a $68 million participation interest in a $309 million mortgage on the 1,000-room Hilton Orlando Bonnet Creek, near Walt Disney World Resort. The hotel is owned by a partnership among GEM Realty of Chicago, Farallon Capital of San Francisco and Blackstone.

The mortgage purchased by Blackstone is secured by the Trump Parc Stamford condo tower, which was completed in 2009 by a group that includes developers Thomas Rich of Stamford and Donald Trump of New York. Only half of the 164 condo apartments have been sold, and itís likely Blackstone will ultimately move to take over the unsold units.

Bank of Scotland and its parent, HBOS, were absorbed by Lloyds, the British finance giant, in January 2009 in a deal brokered by the British government to prevent them from collapsing amid the global financial crisis. Lloyds ceded partial ownership of its operations to the government soon after, and since then it has been shedding commercial-mortgage holdings around the world.

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