Recapitalizing a $900 million logistics portfolio

The portfolio had been assembled between 2018 and 2021 and financed on terms that no longer existed. The maturing facility could be replaced at a margin the assets could service only by suspending the capital program the leases assumed.

The incoming lender was willing to price below market on the coupon in exchange for a share of realized value on disposal, a structure the owner's existing intercreditor arrangements had not contemplated.

We modeled the participation mechanic as a legal question rather than a financial one: at what point does a share of realized value convert a lender into a party with control rights it should not have, and what consent thresholds keep that from happening?

The answer shaped the drafting. Participation was calculated on disposal proceeds without reference to operating decisions, and the lender's consent rights were confined to matters affecting the security package.

We renegotiated the intercreditor arrangements with the mezzanine lender in parallel, which was the critical path and took longer than the senior facility itself.

The facility closed with a seven-year term and a participation mechanic that left day-to-day asset management with the owner.

The capital program proceeded without interruption. Two assets were disposed of in the following year, and the participation calculation was settled without dispute on both.