Lone Star acquires £1bn of Moorfield legacy fund assets and closes £260m Tiger purchase

Lone Star has exchanged contracts to acquire the bulk of Moorfield’s first two UK private equity real estate funds for approximately £1bn and has separately completed its acquisition of Rockspring’s UK ‘Tiger’ shopping centre portfolio for £260m.

Lone Star logoMoorfield, founded by Marc Gilbard and Graham Stanley in 1996, has sold the majority of the Moorfield Real Estate Fund (MREF) and Moorfield Real Estate Fund II (MREFII) portfolios to Lone Star as part of the two closed-ended funds’ orderly wind-up.

Similarly, Lone Star’s acquisition of the Tiger portfolio from Rockspring’s UK Value 1 Fund is also aligned to the fund’s approaching maturity.

Moorfield raised £265m in equity for MREF in 2005 and £389m in equity for MREFII in 2007, the combined £689m equity was leveraged to assembled a circa £2bn UK property portfolio which invested in shopping centres, hotels, student accommodation, offices, business parks, logistics, pubs, residential  as well as mixed-use properties.

Moorfield has not confirmed the assets which have traded, however, the broader MREF and MSREF II fund’s property portfolios includes:

  • the 165,300 sq ft Capitol Shopping Centre in Cardiff, let to tenants including H&M, Austin Reed, Vidal Sassoon, Jaeger, Pret a Manger, Easygym, Hobbs, Tesco and Caffe Nero
  • the 267,000 sq ft Ridings Shopping Centre in Wakefield, let to tenants including Morrisons, Primark, TK Maxx, M&S and Boots
  • the 220,000 sqft Cornmill Shopping Centre in Darlington, let to tenants including Next, Primark, TK Maxx, New Look, Topshop, HMV, Dorothy Perkins, WH Smith and Clarks.
  • A portfolio of 46 Shearings hotels;
  • A portfolio of 24 regional mid-market Mercure & M Gallery hotels; and
  • A 1.9 acre site Baxtergate Site in Loughborough town centre and in close proximity to Loughborough University Campus, originally acquired by MREF for the development of c.600 student bedspaces.
  • An 11% stake in The Capital Pub Company Plc, a London pub owner and operator;
  • Audley, one of the UK’s leading developers and operators of retirement village, with retirement villages at a mix of stages, from fully developed and operating to still in construction phase, to development sites;
  • A 50% stake in the five-strong Brindleyplace office portfolio in Birmingham, which includes major occupiers Deutsche Bank, Royal Bank of Scotland Plc, Deloitte. The joint venture partner is Hines Global REIT;
  • A 50.0% stake in Sovereign Reversions, a business which owns and manages portfolios of UK equity release plans, secured by circa 1,000 residential properties. The joint venture partner is Grainger;
  • West Riding House, a 19-storey mixed use city centre building in Leeds, 68,500 sqft prime retail space and 81,500 sqft of offices, supported by a 440 multi-storey car park.  Major tenants include retailers Next, Tesco and Superdrug and office tenants include Barnett Waddingham and the government;
  • Skypark business park in Glasgow, comprised of 550,000 sq ft across buildings providing a wide variety of office, storage and retail accommodation to tenants, including O2, Travel 2 and Serco;
  • Salisbury House, a Grade II-listed building situated in the City of London with 236,369 sq ft of office, retail and ancillary accommodation; and 
  • Velocity Village, a 612,000 sq ft mixed-use commercial and residential development in Sheffield, across five buildings located on Tenter Street and comprises 364 apartments and more than 100,000 sq ft of commercial office and retail space.

The direct property portfolio trade is expected to close in February, by which time Lone Star will have lined up financing.

The portfolio disposal was off-market, with no other bidders involved, and leaves a small residual number of assets within both MREF and MREFII.

Moorfield will return the capital to fund investors and is expected to announce in early January the final closure of its third fund, Moorfield Real Estate Fund III (MREFIII), which was seeking to raise £250m in equity.

In a statememt, Marc Gilbard, chief executive officer of Moorfield Group said: “This is the largest transaction that Moorfield has undertaken in its corporate history and is a very effective way for MREF and MREFII to realise the majority of their investments.

“We are very pleased with the investment performance this will give to our investors and it allows us to focus on optimising the value of the remaining assets in these funds together with investing our recently raised MREFIII. We are also glad to be able to continue to work with Lone Star and Hudson Advisors to ensure further value is crystalised from the assets that they have acquired.

Angus Dodd, senior managing director at Lone Star, added in the statement: “We are pleased to be acquiring this significant and diversified portfolio of quality assets where there are ongoing asset management opportunities. We are looking forward to working with Moorfield and Hudson Advisors to optimise the value of these assets.”

Herbert Smith Freehills and PWC acted for Moorfield and Allen & Overy, PWC and Doherty Baines acted for Lone Star.

Citigroup finances Lone Star £260m Tiger portfolio puchase

Separately, Lone Star has closed the acquisition of the Tiger Portfolio from Rockspring Property Investment Managers’ UK Value 1 Fund for £260m, financed by a circa £200m Citigroup senior loan.

Underbidders included Cheyne Capital, Orion Capital Managers and Och-Ziff.

Ellandi will act as the asset manager for the seven UK shopping centres, which are located in Aberdeen, Blaydon, Falkirk, Gloucester, Grays, Romford and Southampton.

Major tenants within the portfolio include, Debenhams, Morrisons, Marks and Spencer and ASDA.

The portfolio was brought to market by Rockspring in October for a price of £260m, reflecting an initial yield of approximately 7 percent. Rockspring were advised by Coady Supple & Eastdil Secured.

Exchange and completion took place last Thursday, within four weeks of agreeing heads of terms with the vendor.

For Ellandi, this transaction takes the total number of assets under management by Ellandi to over £600m, comprising 19 community shopping centres.

In a statement, Morgan Garfield, co-founder of Ellandi, said: “We are very excited to have acquired the Tiger portfolio in partnership with a new equity partner. We feel we are buying good quality relatively high yielding assets at an interesting point in the cycle.

“Our ability to acquire the portfolio was based upon our capability to comprehensively underwrite and close the transaction quickly. This is a reflection of the resources and expertise we have built within our platform.

“Investors are increasingly recognising community centres as a defined asset class that offers attractive cash yield and capital growth prospects.”

jwallace@costar.co.uk

About CoStar News

Finance Editor, CoStar News
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