Cerberus-backed LNR pursues $400m restructuring plan

LNR Property will launch a $400m rights offering to recapitalise its business. The firm, the parent company of the largest special servicer in the US, LNR Partners, has engaged Goldman Sachs and Bank of America Merrill Lynch for a new $445m loan which, together with the rights offering, will refinance a $868m senior loan.

LNR Property is recapitalising its business through a $400 million equity rights offering backed by existing shareholders and noteholders.

The firm, owned by private equity and real estate firm Cerberus Capital Management, has also hired Goldman Sachs and Bank of America Merrill Lynch to arrange a new $445 million loan that, together with the equity rights offering, will refinance a $868 million senior secured-term loan, according to a company statement.

The proceeds of the rights offering and the new loan, in additional to cash on hand, will help LNR cancel its existing $150 million revolver loan and pay transaction fees and expenses. As part of the restructuring deal, LNR’s existing $420 million holding company debt will be converted to equity.

Special servicers are coming under increasing pressure as they battle against a rise in CMBS delinquencies. CW Financial Services, the parent firm of US special servicer CWCapital and the second largest special servicer in the country, is currently in the process of being sold.

US office and retail REIT Vornado Realty Trust is believed to be eyeing a stake in LNR, a source familiar with the matter told Reuters. Vornado lost a bidding war for a take-private of LNR to Cerberus in 2004, after the private equity firm bid $3.8 billion. A spokesperson for Cerberus was not immediately available for comment.

LNR Partners is dealing with more than 14,800 CMBS loans valued at around $191 billion as of the end of December, according to the Mortgage Bankers Association, while CWCapital and CWAsset Management was dealing with 12,600 asset-backed mortgages worth more than $162 billion.