Värde Partners and joint venture asset manager partner APAM have closed the circa £50m all-cash purchase of two prime high street retail portfolios from Royal London Asset Management with Credit Suisse already lined up to refinance.
The two portfolios which were marketed as Toucan and Peacock totalled 175,000 sf of prime retail space in 14 units with an annual rent approaching £4m.
Tenants in Toucan and Peacock include Lloyds Bank, Charles Trywhitt, Superdrug, Boots, Monsoon and Fat Face in locations which include Broad Street, Reading, High Street, Winchester and Albion Street, Leeds.
Simon Cooke founder director APAM said: “Rebased rents in strong regional centres provide a solid basis for growth as the UK economy continues to recover and consumers return to the high street. APAM and Varde have been targeting the sector for over two years and this acquisition further demonstrates our commitment to UK regional investment.”
Subsequent to the all-cash closure, Värde is expected to refinance the Toucan and Peacock assets with an existing £160m Credit Suisse credit facility securing the £250m acquisition of the Project Titan portfolio, a mixed-use portfolio from Aviva Commercial Finance, at the turn of the year.
The Toucan and Peacock assets replace the removal of around £50m of stock form the original Titan portfolio which were sold piecemeal over this year at a blended circa 20% above the acquisition price.
The Toucan and Peacock purchases improved the Titan portfolio’s income profile and weighted average unexpired lease, enhancing the debt security for Credit Suisse, which is expected to either syndicate or securitise the loan.
Capital markets execution has proved more difficult in recent months, as is evidenced by the discounted bond sale in three recent transactions: Goldman Sachs’ £646m Logistics UK 2015 plc CMBS for a loan to Blackstone’s Logicor, Reitaly Finance CMBS for a loan to Apollo and BAML’s TAURUS 2015-3 EU DAC for two loans to Starwood Capital’s MStar Europe joint venture fund.
Banks have moved to a risk off phase, as concerns over China, a fragile economic recovery in Europe as well as corporate shocks, such as Volkwagen’s car emissions scandal, which has seen liquidity tighten and credit spreads widen.
Green and Partners advised RLAM; GCW advised APAM Ltd/Varde Partners.
APAM has advised, underwritten and acted as an operating partner to investors on over £8bn of UK assets over the last four years, including advising on £1bn of investments into UK regional real estate in the last 12 months.
In June, Värde Partners closed the all-cash purchase of Bizspace Group, the UK provider of flexible business accommodation, for approximately £138m. APAM was an adviser to Varde on the operating business acquisition.
Last month, APAM appointed PwC’s Simon Hardwick to chair the APAM Board.