US-based Blackstone Group has teamed up with Canadian investor Ivanhoe Cambridge to buy loans backed by a 12% stake in Paris office landlord Gecina. Blackstone's Real Estate Partners Europe III fund and Ivanhoe Cambridge, which forms part of Caisse de Depot et Placement du Quebec, have acquired about 40% of the outstanding bank loans made to two of Gecina’s largest shareholders, Joaquin Rivero's Alteco Gestion y Promocion de Marcas, S.L and Victoria Soler's Mag-Import.
US-based Blackstone Group has teamed up with Canadian investor Ivanhoe Cambridge to buy loans backed by a 12% stake in Paris office landlord Gecina. Blackstone's Real Estate Partners Europe III fund and Ivanhoe Cambridge, which forms part of Caisse de Depot et Placement du Quebec, have acquired about 40% of the outstanding bank loans made to two of Gecina’s largest shareholders, Joaquin Rivero's Alteco Gestion y Promocion de Marcas, S.L and Victoria Soler's Mag-Import.
The highly-leveraged credit facility was provided by 13 European banks in May 2006 and is secured by Gecina’s shares. Most of the lenders involved are cash-strapped Spanish banks and cajas looking to diminish their exposure to real estate and particularly to distressed loans which will soon be forced to transfer for a bargain price to Spain’s new bad bank, Sareb. It is believed that French lenders Natixis and Société Générale are also part of the consortium.
The loan, with a nominal value of EUR 640 mln, is likely to have traded for a large discount to value, similar to past debt transactions seen in Europe and reflecting the strong volatility that is likely to affect Gecina’ stocks in the medium term.
Rivero, who is Gecina's former chairman and CEO, and his partner Soler filed for creditor protection last month following the collapse of refinancing talks with the creditor banks. They had pledged their combined 31% stake in the Paris office real estate investment trust as collateral for the loans.
'This sounds like a great opportunity to steer a company which is in a state of transition, and which offers potential value creation,’ well-informed market sources told PropertyEU. Gecina changed management in October 2011 and announced a new strategy aimed at further diversifying its portfolio and increasing the share of alternative assets. Since then, its share price has surged 35%.
The deal is a private equity group’s third buy into a European listed property company in the recent past. At end-2009, Colony Capital and Orion Capital Managers acquired Goldman Sachs' portion of the approximately EUR 4.2 bn syndicated loan in Inmobiliaria Colonial. In the UK, Area Property Partners launched a EUR 230 mln bid for developer Minerva.
However, in Gecina’s case what is at stake is over 30% of the capital of a much larger real estate investment trust. ‘It is not clear what the strategy of the buyers is. If they want to take advantage of share volatility, they will remain with a small stake. But they may be interested in getting full ownership of the loan which will allow them to decide what will happen to the shares: clearly they would go for immediate recovery of the stocks,’ sources said. With one-third of Gecina's capital, Blackstone and Ivanhoe Cambridge would be a major shareholder in Gecina and have a say in the appointment of the new Chief Executive Officer. 'The opportunity is huge, but the road to get control of the company is a bumpy one.’
