The portfolio, dubbed the BEST Network portfolio and the science park portfolio, was acquired by Angelo Gordon, in a joint venture with Trinity Investment Management, from LaSalle Investment Management, on behalf of the Mars Pension Fund.
The purchase price reflects a net initial yield of 8%, which has already increased to 10% following improving portfolio income since Christmas Eve.
Angelo Gordon, the majority partner in the JV, exchanged contracts on Christmas Eve and completion is expected by early February. After closure, the JV is expected to seek finance from a senior lender at up to 65% loan-to-cost, which would imply around a £60m term loan.
The five-strong portfolio is comprised of: Edinburgh Technopole; Hexagon Tower in Manchester; Kent Science Park, Langstone Technology Park in Havant; Stoneleigh Park in Warwickshire; and Wilton Centre in Teesside.
The timing of the sale, ahead of a formal marketing process, caught a number of interested parties by surprise who were also expected to bid, driven by the both LaSalle and CBRE, which was appointed to sell the portfolio, keenness to book the income ahead of the year end.
What helped, of course, was Angelo Gordon’s willingness to close the deal on a cash-only basis. The relevance of this was due to the nature of the portfolio, which on first look was undermanaged with a notable gulf between gross and net portfolio income.
CoStar News understands that other interested parties included Starwood Capital Group, MEPC and Clearbell.
The legacy problems with the science parks include high vacancies, such as the circa 50% in the Wilton Centre in Teesside. This lost revenue is compounded by empty rates and high service charges, which in some cases as much as double market norms.
Overall, the BEST Network portfolio comprises 1.35m sq ft of lettable space and a blended vacancy rate of 20%, producing an annual rent roll of £15m from its 211 tenants.
CBRE was appointed to sell the portfolio in November, as reported by CoStar News in a wider round-up of the end of last year’s flurry of UK portfolio deals which hit the market.