KKR has agreed a two tranche senior debt facility with Deutsche Pfanbriefbank (PBB) which initially provides acquisition finance for the private equity firm’s purchase of the first phase of Birmingham’s Gallagher Retail Park from the eponymously-named Gallagher Estates.
PBB has extended a £68.5m senior facility which is comprised of two separate tranches, writes Paul Norman and James Wallace.
The first tranche, which is thought to be around £33m, finances KKR’s purchase of the first phase of Gallagher Retail Park, in Axletree Way, Wednesbury, acquired for circa £51m, reflecting a circa 5.75% net initial yield.
The first phase, located near junction 9 of the M6, comprises of 68,000 sq ft retail warehouse space which is let to tenants including Next, TK Maxx, Mama’s & Papas and Boots.
KKR also has an option to purchase the second phase of the Gallagher Retail Park later in the year, with the second PBB senior debt tranche to be utilised to finance the forthcoming acquisition. The future sale price of the second phase of Gallagher Retail Park is still to be finalised but is expected to come in at just over £50m.
The second phase of Gallagher Retail Park covers 96,000 sq ft and is leased to Curries, Furniture Village, Bensons and SCS for around £50m again.
KKR has appointed Quadrant Estates as the asset manager over Gallagher Retail Park.
PBB and Quadrant Estates were also senior lender and asset manager, respectively, for KKR’s £112m 430,000 sq ft Tuscany retail warehouse portfolio acquisition from Resolution Property in June 2013 after an earlier £125m sale to Starwood Capital collapsed.
PBB provided an £80m facility comprised of acquisition finance, a capex tranche and a top-up facility linked to asset management targets.
Montagu Evans advised KKR and Quadrant on the acquisitions.
In a prepared statement, Charles Balch, head of international clients, UK & CEE at Deutsche Pfandbriefbank, said: “pbb Deutsche Pfandbriefbank is proud to continue to support KKR with their second direct real estate acquisition in the UK.”
KKR, Gallagher and Quadrant declined to comment. PBB declined to comment beyond the press statement.
CoStar Finance 