Property deal showcases capital advisory services

Citco Capital Solutions launched after successful cross-border real-estate financing demonstrates group’s unique knowledge and skills

Last year, we received a call from a fund manager we had known for years. The fund had a relationship with an Eastern European bank that was looking to sell a non-performing loan secured by a large real estate project in a major metropolitan area.

The fund manager’s initial due diligence indicated that the property itself was viable, though its existing capital structure was not. It had decided to purchase the underlying debt at a discount, foreclose on the asset, and effectuate a capital improvement plan.

This plan would help various stakeholders: the bank’s regulators would be pleased with the removal of a non-performing loan securing insured deposits; a poorly performing property would be improved, benefiting the local community; and, not least, if all went well, the fund manager would make a substantial profit on its investment.

However, purchasing a €100 million loan would breach the fund’s position concentration limit. Therefore, it required a co-investor that could analyse the physical, financial and cross-border complexities and which had sufficient capital to allocate to a large transaction.

Citco provides the solution

Citco spent time analysing the transaction and conducted detailed research on the property, the market, its tenants and cash flows. Our due diligence extended to the scope of the improvement plan and its ultimate likelihood of success. We also conducted sensitivity and scenario analyses to better understand the risks to the downside and upside. Finally, Citco relied on its long-standing relationships and position of trust with clients that provide capital for alternative assets. We searched our extensive global network and found a US-based distressed credit investor with the expertise and knowledge to quickly analyse a large Eastern European non-performing property loan. With Citco’s assistance, the investor analysed, underwrote and closed the transaction on time.

We concluded that this story represented a perfect example of how we could harness the broader Citco platform to deliver value to a client. Moreover, our research indicated that clients would benefit from a dedicated capital advisory team to help them meet their financing and investment goals.

Not quite a year later, we are pleased to announce the formation of Citco Capital Solutions. The team has a combined 35 years of experience as principal investors and capital advisors, with expertise in timely, thorough analysis of complex situations relating to a diverse array of alternative assets.

We have experience raising a broad range of debt and equity capital, including subscription lines, project finance and warehouse lines, as well as joint-venture, preferred and co-investment equity.

Deep knowledge of alternatives

Citco’s institutional knowledge of alternative assets, coupled with our global relationships, help us to achieve best execution on behalf of all our clients across Citco divisions. Our long-standing reputation for stability and independence allows us to represent our clients without any conflicting objectives.

Clients who are seeking fund-level debt or investment-level debt or equity should contact their relationship manager. The Capital Solutions team looks forward to hearing from you, advising you and helping you find solutions for your capital needs.

9th September 2016

Our contacts

Michael Peterson

Michael Peterson

Head of Capital Markets,
Citco Capital Solutions Inc.

T+1 212 401 9600
LNew York