TPG, Patron Capital succeed in European deal

The US private equity firm, TPG Capital, and London-based Patron Capital, have persuaded Class A bondholders in a defaulted CMBS situation to accept a restructuring proposal.

TPG Capital, the US private equity firm, and London-based Patron Capital have won an important bondholder vote in Dutch property company Uni-Invest giving the pair access to their first deal together in Europe.

More than the requisite 75 percent of Class A bondholders in the Opera Finance CMBS that has defaulted voted in favour earlier today of a structured solution put forward by the pair.

TPG and Patron, via a special purpose vehicle Utrecht Holdings, will now be able to buy a senior loan linked to Uni-Invest.

Uni-Invest was taken private by Lehman Brothers Real Estate Partners and DeMerwede Group for €884 million in 2002, but the company got into trouble over €750 million of debt. In February this year, the associated CMBS organised by Eurohypo bank in 2005 became Europe’s first CMBS to default on legal maturity. Attempts last year to sell shares in Uni-Invest giving bidders an ownership stake in its €634 million portfolio comprising of 142 offices and 61 warehouses failed.

TPG and Patron’s credit bid has been approved over an alternative strategy put forward by Valad Europe, owned by The Blackstone Group. Valad’s proposal was put to a vote earlier today, and gained support from B, C, and D note holders, but not the required majority of A note holders.

Uni-Invest said in a statement: “Today, the future of real estate fund Uni-Invest became clear,” and added that a significant majority of the 93.6 percent A noteholders present at the EGM supported TPG and Patron’s proposal.

Pieter Roozenboom, chief executive officer of Uni-Invest, said in a statement: “We are delighted with today's outcome and we look forward to our partnership with TPG and Patron. TPG and Patron are respected private equity firms that have extensive experience in the real estate market in which Uni-Invest operates. We feel that these two new partners can truly add value to our business and help us in further optimizing our portfolio and servicing our clients.”

There was no statement by TPG or Patron, but Valad Europe did issue a response.

Marty McCarthy, chief executive of Valad Europe, said: “Whilst we are pleased to have secured the positive vote of the Class B, C and D Uni-invest Noteholders for the Opera Finance Consensual Restructure proposal, we were disappointed not to have secured the 75 percent threshold required to secure the A Noteholder's positive vote. We are however, grateful for the A Noteholders for having selected Valad Europe as their preferred asset manager for the Consensual Restructure option and we continue to believe that consensual restructuring of future CMBS defaults offers a credible alternative to investors who wish to retain control post restructuring, whilst allowing the value of their underlying asset collateral to be maximised and disposed of in an orderly manner. We look forward to working with other CMBS Noteholders in the future, as we have done in the past on the Kefren and ECREL mandates.”

The Uni-Invest CMBS vote has generated huge column inches in the property press, given its tag as Europe’s first CMBS to default on maturity.

Though there are many clear differences and nuances between the proposals by Valad Europe and TPG/Patron, the clincher appears to be that TPG and Patron were offering Class A noteholders 40 percent of the outstanding principal immediately.

Class B, C, and D noteholders supported Valad Europe’s plan involving an asset-by-asset value redemption approach with a four year maturity extension because it offered them the prospect of some recovery.

Eurohypo, the German bank, as the original lender also acted as special servicer, advised by Cairn Capital.