Delin Capital Asset Management (DCAM) has refinanced the all-cash purchase of the UK logistics Wave portfolio from InfraRed Capital Partners and three single asset acquisitions from separate vendors with a cross-collateralised £70m five-year fixed-rate senior loan from Deutsche Pfandbriefbank (PBB).
DCAM acquired the 1m sq ft Project Wave portfolio, comprised of five prime distribution warehouses at a net initial yield of 7.2% after allowing for rental guarantees, from InfraRed Capital Partners for £66m in January.
Project Wave comprised:
- the 382,000 sq ft Wakefield Distribution Centre located in the Normanton/ Wakefield Europort distribution hub, fully let to Exel UK Ltd with a guarantee from DHL Supply Chain Ltd on a lease expiring in 2022;
- the 164,000 sq ft high spec Magna Park Distribution Centre in Lutterworth within the ‘Golden Triangle’ let to DHL Supply Chain Limited on a lease expiring in 2023
- the 164,000 sq ft West Moor Park Distribution Centre in Doncaster let to The Scotts Company UK until 2026;
- the 212,000 sq ft Swift Valley Park Distribution Centre in Rugby, which is currently vacant although it includes 18-month rent guarantee from InfraRed to compensate for empty rates
- the 105,000 sq ft distribution warehouse located in Wednesbury, near Birmingham, let to BTC Activewear until 2019.
At the same time, DCAM completed the acquisition of the 353,000 sq ft Midpoint 18 Distribution Centre and let to Kuehne and Nagel until 2017 for £15m, reflecting a net initial yield of c. 7%.
The vendor was ultimately Heleba which had enforced over a defaulted legacy loans and sold the asset through joint fixed charge receivers Jon Gershinson and Ania Packman of Allsop.
In addition, DCAM separately acquired the Agecroft Commerce Park Distribution Centre in Salford in Greater Manchester from Investec Property for £13m in September 2013.
The distribution centre is let to Bunzl Retail and Healthcare Supplies on a lease expiring on March 31, 2027, subject to a break option on March 31, 2017 and at a rent of £975,000 per annum. The lease is guaranteed by Bunzl plc, a FTSE 100 company.
Finally, back in December 2012, DCAM bought the 172,415 sq ft Cabot Park Distribution Centre in Bristol, let to Yankee Candle, from Standard Life Investments for £12m.
The aggregate purchase price of the 1.77 m sq ft eight-strong UK logistics portfolio was £106m – bought between December 2012 and January 2014 – while the revaluation ahead of the PBB senior loan was £115m, reflecting an 8.5% upward revaluation.
PBB’s fixed rate senior loan, which was priced at around 200 basis points over the five-year swap rate, reflects a 60% LTV.
DCAM initially offered the finance mandate to around 20 lenders, including UK clearing bank, pfandbrief banks, insurance lenders as well as higher leverage lenders including stretched senior and mezzanine, but quickly settled on a 60% LTV cap in line with the risk profile of the DCAM’s €400m Capital Preservation Portfolio I fund.
Underbidders are thought to have included a number of pfandbrief banks, including Heleba and Aareal Bank.
DCAM will use the proceeds of the loan to fund future all-cash acquisition for its €400m Capital Preservation Portfolio I fund, which has now amassed a portfolio of €290m of assets. At funding, the portfolio had an occupancy rate of 88%.
DCAM fund targets income-producing logistics assets across the UK and The Netherlands to deliver secure, long-term and potentially indexed linked income streams combined with real capital preservation.
Christian Jamison, chief executive officer of DCAM, said in a statement: “We are very pleased to have been able to secure this new tranche of leverage which is directly in line with our strategy for CPP I as we remain focussed on the sustainable growth of the Fund.
“Having successfully leveraged our Dutch portfolio earlier in the year, we are now well placed to recycle further capital into new acquisitions to ensure we continue to deliver accretive capital returns to our investors.
“The market opportunity in logistics in our target markets remains extremely compelling, driven by the number of well capitalised institutional investors seeking access to low risk, core income producing assets coupled with strong e-commerce and manufacturing trends.
“As such, and as a result of the success of CPP I, which we expect to reach its €400m target by the end of the year, we will look to raise new funds to ensure we remain well placed to capitalise on these attractive investment dynamics.”
Charles Balch, head of real estate finance international, UK & CEE at
Deutsche Pfandbriefbank, said: “We are delighted to be providing this financing for
this regional logistics portfolio. The transaction represents further expansion of the
Bank’s portfolio secured on regional assets and evidences pbb’s appetite to provide
financing for assets outside London.”
DCAM was advised by CMS.