Lone Star Funds, through an affiliate of its Lone Star Real Estate Fund II, is set to purchase the A and B notes of Excalibur, Lehman Brothers’ €1.8 billion legacy securitised real estate debt portfolio, from Deutsche Bundesbank. Citigroup and the Royal Bank of Canada are expected to provide about €300 million in senior debt financing to back the acquisition, which is slated to close by the end of the month.
The loans, which have a face value of approximately €960 million, reportedly account for the remaining debt in the Excalibur collateralised debt obligation, with the exception of three CMBS positions. In January, Lone Star completed its first Excalibur deal, consisting of a single loan secured by various tranches of the Windermere XIV securitisation. The combined face value of both acquisitions totals approximately €1.4 billion.
Lehman had securitised the legacy loans and CMBS bonds in Excalibur just months prior to its 2008 collapse, with the purpose of selling the portfolio through the European Central Bank’s emergency liquidity window, according to CoStar Finance.
Lone Star’s latest deal marks the fourth nonperforming loan acquisition in as many months. In addition to the previous Excalibur purchase, the firm also won a €200 million portfolio from Société Générale earlier this month and bought a £900 million (€1 billion; $1.4 billion) portfolio known as Project Royal from Lloyds Banking Group in December.
Lone Star could not be reached for comment at press time.