Starwood Seeks Extension On £200M Maturing Spanish Office Loan

Private equity giant Starwood Capital has asked lenders for an extension to a loan secured against a Spanish office portfolio that matures in two weeks. 

A total of €242M (£204M) of debt secured against six offices in Madrid and one in Barcelona valued at €368M (£310M) matures on 16 September. Starwood has asked for a three-year extension to September 2027, according to a notice to investors who bought bonds secured against part of the loan.

A Starwood opportunity fund bought eight offices, the six in Madrid and two in Barcelona, in two separate deals from Oaktree Capital and Autonomy Capital in 2019. It bundled the assets together and refinanced them with €320M of senior and mezzanine debt at a valuation of €416M. 

In 2021, a portion of the senior debt was securitised by Bank of America and bought by bondholders. The original loan was extended by a year in 2022 and 2023. Now, Starwood seeks a longer extension. 

Since the original acquisitions, Starwood sold one office in Barcelona, reducing the loan value to €242M and the overall valuation to €368M, according to the last publicly available report to bondholders in August 2023. 

The 2.1M SF portfolio produces annual rent of €20M, is 16% vacant and has a weighted average lease term of two years, according to the report. The biggest tenant is technology company Indra, and the most valuable property is the €144M San Fernando Business Park in Madrid. 

In exchange for the loan extension, Starwood is repaying €15M of the senior loan and €9M in capex loans. It is paying an increased interest margin of 3.2%, 100 basis points higher than the margin it was paying previously. 

Bondholders will vote on the proposals in the next two weeks. Brookland Partners is advising Starwood on the restructuring.