Palm Capital acquires GBP150 million sub-performing UK loan book from Lone Star

Palm Capital, a pan-European real estate private equity and special situations specialist, has acquired Project Falcon, a GBP150 million sub-performing loan book secured against a portfolio of 80 UK commercial real estate assets, from Lone Star.

Project Falcon’s underlying portfolio is well diversified by asset class with 49 per cent of high street retail and long let retail warehouses, 12 per cent leisure, 15 per cent logistics and 21 per cent offices. The loan book, which was part of the Project Churchill portfolio, has an average maturity of over 8 years. The portfolio is spread across a variety of locations in the main UK markets and the underlying leases have a WALT of eight-and-a-half years.
Palm Capital has identified this 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. 
Reda Khatim, Managing Director at Palm Capital, says: “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.”