Morgan Stanley loan refinances L&R’s £575m Atlas portfolio

By James Buckley - Monday, November 06, 2017 15:58

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Morgan Stanley has refinanced the debt secured against London & Regional’s 48-asset Atlas hotel portfolio with a £400m+ facility, CoStar News can reveal.

Morgan Stanley has provided the facility, which represents a loan-to-value on the portfolio of Holiday Inn Express-branded hotels of just under 70%, carrying a term of five years and a floating rate of interest.

The 5,800-room Atlas portfolio comprises 47 Holiday Inn Express-branded hotels and one Hampton Inn Hotel by Hilton, which originally were part of the Project Salt and Rock portfolios, which Lone Star acquired from IBRC in 2014. The portfolio is spread across England, Scotland and Wales.

L+R, advised by HFF on the refinancing, is a global property business and developer with an investment portfolio of over £9bn. Advised on the legals by Reed Smith, it acquired Atlas Hotels from Lone Star in April 2016 for £575m. The acquisition of Atlas represented the first budget addition to L+R’s existing portfolio of luxury hotels, which comprised 6,600 rooms across Europe and the Caribbean.

Last August, Starwood European Real Estate Finance issued a share placing to raise £73m to buy a £75m mezzanine loan secured against the portfolio of UK budget hotels.

The facility is a £75m five year floating rate loan. At the time of L+R’s acquisition, Deutsche Bank and Bank of America Merrill Lynch provided the £315m senior loan, reflecting a circa 60% loan-to-value after providing a £390m whole loan. Starwood's mezzanine loan reflects around a 70% loan to value ratio.

The HFF debt placement team representing the borrower included senior managing director Michael Kavanau and director Brad Greenway.

“HFF is extremely excited and privileged to begin a new relationship with L+R while continuing to expand the existing relationship with Morgan Stanley to Europe,” said Kavanau, senior managing director and co-head of HFF’s London office.

“The successful outcome exemplifies our belief that our clients can benefit from the still relatively new debt advisory product in Europe,” added David Church, head of European Corporate Finance and co-head of HFF’s London office.

Jimmy Theodorou, Vice Chair of the Global Real Estate Practice at Reed Smith, said: “We are delighted to continue to advise this valued client in relation to the management of this strategically important part of their property portfolio.”

Osborne Clarke LLP acted on real estate matters for Morgan Stanley.

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