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Lone Star in £1bn ‘off market’ UK deal

The Dallas-based private equity real estate firm has bought a diversified portfolio of UK assets from the London-based The Moorfield Group.

Dallas-based private equity real estate firm Lone Star Funds has acquired a UK property portfolio in an “off market” transaction with London-based real estate fund manager the Moorfield Group for £1 billion (€1.3 billion; $1.5 billion).

Lone Star invested equity from its $7 billion Lone Star Real Estate Fund III (LSREFIII), which closed in October 2013, and with senior debt financing from RBC Capital Markets and Wells Fargo.

The portfolio comprises of both traditional real estate investments, such as retail and offices, as well as alternative real estate investments, including hotels, residential and student accommodation.

Some of the highlights of the portfolio consist of: Salisbury House, a Grade II listed building situated in London’s financial district which has a total of 236,369 square foot of office and retail space, Pinnacle, a 19 storey mixed-use city centre building in Leeds and Skypark, an urban business park in Glasgow.

Moorfield Group will continue to have a role as asset manager, alongside Lone Star’s London-based real estate asset manager Hudson Advisors, to ensure there is continuity of the asset management initiatives.

The transaction is Moorfield’s largest in its history and has meant its first two funds have disposed of the majority of its investments, according to Marc Gilbard, chief executive of Moorfield Group.

“We are very pleased with the investment performance this will give to our investors and it allows us to focus on optimising the value of the remaining assets in these funds together with investing our recently raised MREFIII,” Gilbard added.

The deal was conducted “off-market” with Doherty Baines acting on behalf of Lone Star. Law firm Herbert Smith Freehills and PwC acted for Moorfield, while Allen & Overy, Pinsent Masons, Shoosmiths and PwC acted for Lone Star.

Both Lone Star and Moorfield were unable to return a request for further comment by press time.