Goldman Sachs is in pole position to buy the 18-strong UK mixed-used Angel portfolio from the Tyne & Wear Pension Fund for around £70m, as bidders circle on the £80m ‘Tiger’ and the £49m Silver Oak UK portfolios.
Aberdeen Asset Management, the sole manager of the £4.3bn Tyne & Wear Pension Fund’s property portfolio, is expected to improve upon its £65.6m asking price for the Angel portfolio, which was subject to a failed bid by a private Bournemouth-based property company in early autumn.
The two additional UK secondary portfolios – the 15-strong ‘Tiger’ portfolio, which is comprised of some of the most distressed Glanmore assets, and the 13-strong Silver Oak portfolio – take the aggregate looming secondary property sell-off to 46 properties across three portfolios worth around £200m.
The likelihood that all three portfolios will trade before year end exemplifies several established trends:
- the improving sentiment among investors, and risk appetite, supported by an improving macro-economic picture;
- the need to put capital to work; and
- the enduring hunt for yield by, ultimately, the underlying investors in the private equity and institutional funds in a depressed bond yield environment.
A complete property-by-property list of the Angel and Silver Oak portfolios is published below.
CoStar News understands that the sale of the £80m Tiger portfolio is the most difficult, with some assets left with little residual value although Tiger contains sufficiently attractive turnaround investment plays to ensure the portfolio will trade.
KKR was an early favourite for the ‘Tiger’ portfolio but have now pulled out, CoStar News understands.
The ‘Tiger’ portfolio is comprised of 15 assets spun out of the Glanmore Property Fund, for which the defaulted RBS debt was acquired by Elliott Associates and its affiliate, Urbicus.
Elliott Associates and Urbicus previously together acquired the first-ever non-performing loan portfolio sale by IBRC, which was a circa £300m pool of defaulted Scottish property loans at a discount steeper than 50%.
A sale of the 15-strong ‘Tiger’ portfolio at around £80m would reflect a net initial yield of 12%, but the portfolio is the most difficult of the three with some of the assets very distressed.
The 13-strong Silver Oak portfolio, owned by a Russian-based investor, came out to market last month, and is expected to court interest from several institutional property fund managers and mid-sized private equity funds.
The Angel portfolio is comprised of eight industrial properties, four offices, four retail assets and two retail warehouses across a combined 1.17m sq ft.
The Angel portfolio’s £7.29m annual income by region is split as follows: London and the South East, 37%; Midlands, 20%; the North and the North West, 26%; the North East 6%; Scotland, 9%; and Wales, 2%.
Angel has an overall vacancy rate of 15%, or 177,376 sq ft, while the weighted average unexpired lease term of the portfolio is 6.04 years to expiries and 5.09 years to breaks.
Tenants include the Secretary of State for the Environment, Poundland, Oxfam, The Body Shop International, Sportsdirect.com, Aldi Stores, and B&Q.
The top nine tenants in the portfolio by rent are included in this group, and together comprise in excess of 34% of the annual portfolio income.
A purchase at the asking £65.6m would represent a net initial yield of 10.5% after purchaser’s costs of 5.8%.
- Grange Road, Batley
- Expressway Business Park, Abergele Road, Bodelwyddan
- Hawkins Drive, Cannock
- Protea Way, Pixmore Avenue, Letchworth Garden City
- Benield Business Park, Benield Road, Newcastle-Upon-Tyne
- Units 1, 3 & 4, Ravens Way, Crow Lane, Northampton
- Club Court, Club Street, Bamber Bridge, Preston
- Units 1 & 2, Axis, Leacroft Road, Risley, Warrington
- Enterprise House, Interchange O‑ ice Park, Leeds
- 58/60 St Aldate’s Road, Oxford
- Thames Central, Hatield Road, Slough
- Cassiobury House, 1119 Station Road, Watford
- 57-67 Union Street & 19 Market Street, Aberdeen
- 50/52 Linthorpe Road, Middlesbrough
- 226-238 Commercial Road, Portsmouth
- 16 44 Fishergate and 15/16 Chapel Street, Preston
- Wyrley Brook Retail Park, Vine Lane, Cannock
- Corporation Street Retail Park, Corporation Street, Preston
Silver Oak portfolio
The Silver Oak portfolio, which is seeking offers in excess of £49m, is comprised of five in London and the South East – of which three are in central London – two in the Midlands, two in the North West and four in Scotland.
Silver Oak, first revealed by CoStar News last week, is comprised of 11 offices and two retail properties, with major tenants including The Secretary of State for the Environment, Lloyds Bank, Central Scotland Valuation Joint Board, Standard Chartered and Cap Gemini.
The average weighted unexpired lease term of approximately 5.83 years to expiry and 5.34 years to break. Total passing net rent is £4.17m per annum.
Over 50% of the income has an unexpired term to break and expiry of more than five years. Income analysis by geography reveals that 38% of income is derived from the five central London and South East properties, with a further 33% of income from the Midlands assets.
The Northwest properties account for 18% of the portfolio’s income, while the balance, at 11%, is made up by the four Scottish properties.
The Russian vendor is seeking offers in excess of £49m, exclusive of VAT, after deduction of purchaser’s costs of 5.8%. A sale at £49m would reflect a net initial yield of 8.04%.
Central London & South East
- 4 Harley Street
- 4 Tavistock Place
- 66 Warwick Square
- Pinnacle House, Hartfield Road, Wimbledon
- 809 & 811 Silbury Boulevard, Milton Keynes
- Aston 1 & 2, Avenue Road, Aston, Birmingham
- Lloyds Bank, Fountain Square, Hanley, Stoke on Trent
- Charter House, Dalton Square, Lancaster
- St Marks & St Marys House, St Marys Street, Preston
- Charter House, Dalton Square, Lancaster
- Riverside House/Clyde View, 260 Clyde Street, Glasgow
- 1 – 6 Moss Street, Paisley
- Hillside House, 1 – 4 Laurelhill Business Park, Stirling
Tudor Toone is selling Angel, CBRE is selling Tiger and Jones Lang LaSalle is selling Silver Oak.
All parties declined to comment.