US private equity firm Lone Star has bought 50% of the EUR 1.8 bn Excalibur portfolio from Germany's central bank and is in exclusivity to buy the bulk of the remaining loans, according to a report from property wire CoStar Finance. It is unclear how much Lone Star will pay for the loans but the 40% discount it agreed for Project Royal last year is understood to be a fair guide.

Lone Star has reportedly closed the first tranche of the deal and hopes to finalise the second tranche by the end of February. Citigroup and the Royal Bank of Canada are mentioned as potential financiers for the acquisition.

The principal component of Excalibur is a EUR 434 mln portfolio of pan-European CMBS bonds owned by Carlyle Group, which were financed by a senior loan from Lehman Brothers before the credit crunch, according to CoStar.

Bundesbank mandated AgFe in September last year to advise on the sale of over EUR 4 bn of property loans left by the collapse of Lehman Brothers in 2008. The process - named Excalibur - represents one of the biggest distressed sales in the European property history.

The loans and bonds were swapped by Lehman Brothers with the European Central Bank (ECB) in 2008, in an effort to prevent bankrupcy.