Investcorp Buys Mezzanine Debt Used to Back Paramount Hotel Sale

NEW YORK, Nov. 14, 2011 /PRNewswire/ -- Investcorp's US-based real estate arm announced today that it has purchased mezzanine debt backed by the Paramount Hotel in New York City's Times Square.

Investcorp purchased two existing mezzanine loans with a principal balance of $40 million from Fillmore Capital Partners, who was an existing lender for the Paramount at the time of RFR's purchase of the hotel in October 2011.  The transaction allows Investcorp to participate in the hotel investment through the purchase of the two performing loans. This is in line with Investcorp's business strategy to be an active player in the areas of both debt and equity investments in US commercial real estate.

The Paramount is a 20-story hotel that was built in 1928.  It has 597 boutique-style guestrooms which are in strong demand as a result of the hotel's prime location in the heart of Times Square.  The property was most recently refurbished in 2009 with upgrades to guest rooms, bathrooms and public areas.  Highgate Holdings, a national hotel manager, will continue to operate the Paramount on behalf of new ownership.  Highgate also manages another unrelated national hotel portfolio on behalf of Investcorp.

Christopher Hoeffel, a Managing Director at Investcorp said: "We're pleased to have had a chance to provide financing for a transaction involving one of New York City's most renowned hotels, and one that is in a particularly attractive location.  Our longstanding relationship with RFR helped to expedite closure of this deal in a very condensed timeframe."

This purchase of the Paramount Hotel mezzanine loans adds to Investcorp's active and growing portfolio of real estate debt investments.  Investcorp holds various tranches of commercial real estate debt backed by hotels, office buildings, residential properties and other asset classes. The firm actively manages its debt investments, having successfully sold several loan positions in 2010 and 2011, including, in 2010, the sale of a $100 million first mortgage loan backed by the U.S. Coast Guard headquarters in Washington, DC and $100 million of notes secured by New York City hotels.

"Investcorp continues to be an active player in the market for real estate debt due in large part to a strong network of relationships that includes real estate operators, intermediaries, senior lenders and other market participants who help us source attractive opportunities," said Chris Sameth, an Investcorp Principal who worked closely on the transaction. "This is an important time to be in this market for a stable, liquid investor like Investcorp.  As the market has become less efficient in the past few months, we've recently seen an increase in sellers of existing debt positions and opportunities to originate subordinate debt."

The deal also builds on Investcorp's already strong relationship with RFR, which is an operating partner in the W South Beach, a property that Investcorp acquired in 2004 and ultimately developed with RFR.  Investcorp and RFR have also been partners on other successful investments that include the Miracle Mile retail shopping center in Las Vegas.

About Investcorp

Investcorp is a leading provider and manager of alternative investment products.  Investcorp has offices in New York, London and Bahrain and is publicly traded on the Bahrain Bourse (INVCORP).  Investcorp has three business areas: corporate investment in the US, Europe and MENA, real estate investment in the US and global hedge funds.  As at June 30, 2011, Investcorp had $11.8 billion in assets under management.  Further information is available at www.investcorp.com.  Further information is available at www.investcorp.com.

SOURCE Investcorp



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