Capital Trust reaches debt restructuring deal

April 01, 2011 09:00AM

Real estate finance company Capital Trust has reached a deal to restructure its outstanding debt, thanks in part to an $83 million mezzanine loan by an affiliate of Five Mile Capital Partners that will finance a new subsidiary holding the bulk of Capital’s interest-earning assets. According to an announcement yesterday, Capital will extinguish its $98.1 million senior credit facility and $143.8 million in junior subordinated notes while spinning off its $339.6 million in legacy repurchase obligations with JPMorgan, Morgan Stanley and Citigroup into the new CT Legacy REIT. Capital was among the lenders that helped finance Morgan Stanley’s $6.7 billion purchase of the CNL Hotels assets in 2007, and that seized the portfolio earlier this year. Five Mile will have a 24.2 percent stake in the newly-created subsidiary. The three banks each received cash pay downs of 10 percent of their outstanding balances, for a total of $33.9 million, while maturity dates for the loans were extended to March 2013 and March 2014. The restructuring deal leaves Capital free of recourse debt going forward. “Capital Trust maintains the full capabilities of its platform and is well positioned to continue its capital raising, investing and asset management activities,” Steven Plavin, Capital’s CEO, said of the deal. TRD

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