CAM Capital buys legacy Project Isobel BT data centre financed by ICG-Longbow

CAM Capital has acquired the BT data centre in Cardiff which was formerly partially collateral in the Project Isobel loan portfolio for approximately £25m.

CoStar News understands that ICG-Longbow has been lined to up finance the asset with a circa 85% loan-to-cost (LTC) facility, implying a loan of £21.25m.

CAM Capital is a holding company for an opportunistic high net worth private investor called John Lennon.

The chronology of this transaction is quite complex.  

Mapeley acquired a 27-strong portfolio of assets, dubbed the Delta portfolio, for £217.2m financed with a £152m club loan led by Heleba.  RBS, ING Real Estate Finance and Handelsbanken also participated in the original facility in March 2008.

RBS’ share of the loan was parcelled up in the Project Isobel loan portfolio which Blackstone acquired. Alongside ING and Handelsbanken, Blackstone worked out the bulk of the 27-strong portfolio, leaving just the Cardiff data centre, let to BT whose lease expires in January 2020, and a vacant office building in Gosforth, Newcastle.

The lending consortium appointed Allsops to sell the data centre last year with a number of bids being received throughout this year, at prices ranging from £27m up to £43m. The central deal to execute in this transaction is to re-gear BT’s lease, preferably on a 20 to 25 year lease.

However, BT has been unwilling to commit to a new lease and has insisted to lenders, and prospective buyers, that the centre is non-core to its business.  

The data centre is comprised of 30,000 sq ft of office space and a 40,000 sq ft data centre. The annual rent was £3.8m and the lease expires 6 January 2020.

Following a number of bids which failed to close, Blackstone opted to sell its approximately 25% interest in the club loan – for which the unpaid loan balance had fallen to £73.4m – to Park Street Advisors, the private equity fund founded by Pradeep Pattem.

Park Street’s price for the nominal £18.35m loan was below the proportional value that the asset has now traded for, CoStar News understands.  

In addition, the loan has £20m in swap liabilities, taking gross liabilities to £93.4m.  Park Street’s activist role in buying the defaulted loan extended to offers for Heleba’s majority stake, but no deal concluded.

Running concurrently was Allsop’s sale effort of the direct real estate, which ultimately concluded in the CAM Capital purchase, financed by debt fund ICG-Longbow.

It is believed that if CAM Capital is able to secure the BT lease re-gear, the value of the data centre will significantly rise but this could take more than three years to develop, if at all. If Cam Capital is successful in this respect, the currently high LTV would of course fall substantially.

As part of its negotiation with Blackstone for the 25% stake in the legacy Delta Loan, Park Street also acquired Blackstone’s interest in the vacant Gosforth office.

About CoStar News

Finance Editor, CoStar News
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