NEW YORK (Dow Jones)--Bank of America Merrill Lynch and Goldman Sachs (GS) priced $2.3 billion in mezzanine debt left over from the $26 billion buyout of Hilton Worldwide by Blackstone Group (BX) in 2007, according to people familiar with the matter.
That buyout deal was done at the peak of the market, and just before the credit market collapsed, making it difficult for the seven banks involved in the transaction to get the debt off their books.
In the past six months, prices of commercial real estate securities both in the primary and secondary debt markets have improved dramatically. Much of this is due to the ready flow of capital from a growing pool of investors, who see these assets as relatively safe and cheaper than other comparable corporate debt.
So much so that the stalled attempts to securitize and sell the Hilton debt have been revived after nearly three years. Bank of America and Goldman are working together to sell the more than $5 billion of debt on their books. The first phase was the mezzanine debt sale, of which Bank of America held $1.7 billion and Goldman the remaining $600 million.
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