Pan-European real estate private equity business Palm Capital has acquired Project Falcon, a £150 mln (€170 mln) sub-performing loan book secured against a portfolio of 80 UK commercial real estate assets, from private equity peer Lone Star.
Project Falcon’s underlying portfolio is 'well diversified by asset class', according to Palm Capital, with 49% of high street retail and long let retail warehouses, 12% leisure, 15% logistics and 21% offices.
The loan book, which was part of the Project Churchill portfolio, has an average maturity of over eight years. The portfolio is spread across a variety of locations in the main UK markets and the underlying leases have a weighted average lease term of 8.5 years.
Reda Khatim, managing director at Palm Capital, said: 'This transaction highlights Palm Capital’s strength in capitalising on special situations across the risk spectrum.
'We were particularly attracted to the long duration, largely performing nature of this loan book, which provided a superior risk return exposure and a high degree of protection. Furthermore, this transaction also leverages our in-depth historical experience in acquiring distressed situations combined with our strong asset management expertise.'
Palm Capital said it had identified an opportunity to gain an 'interesting exposure to the regional UK market, which offers a superior risk-return profile, a strong income yield and upside potential'.
Savills and Acuitus advised Palm Capital. CBRE acted for Lonestar.