Knowles agreed a discounted purchase offer (DPO) for £90m last May with Solutus Advisors, which managed the specially serviced the Lea Valley loan, through his real estate investment, asset management and receivership firm, FI Real Estate Management Limited (FIREM).
The £90m figure included £2m was earmarked for costs associated with executing the transaction, cited as “legal, valuation and advisory costs”.
FIREM financed the DPO acquisition with a £72.7m five-year senior and mezzanine facility provided by Aviva Investors Real Estate Finance and Pramerica Real Estate Investors. The loan financing reflects an 82.6% LTV. No senior and mezzanine split was provided.
The DPO reflected a 58.2% discount on the £210.7m unpaid balance and a 1.5% discount on the latest £89.4m valuation of property portfolio, as reported by Situs in January 2015, secured by the Lea Valley loan, which forms part of the DECO 8 ‐ UK Conduit 2 p.l.c CMBS.
Since the portfolio’s £89.4m valuation, commissioned by FIREM to Cushman & Wakefield and dated 29 August 2014, a number of tenants have exercised break clauses.
The last published quarterly investor note for the CMBS transaction, dated 20 October 2015, reported that the Lea Valley portfolio comprised 24 properties over 4.8m sq ft with a weighted average lease term of 2.2 years from 316 tenants which deliver £12.1m in annual net income.
In a joint statement by Aviva Investors Real Estate Finance and Pramerica Real Estate Investors, the £72.7m facility is secured by regional portfolio of 26 industrial assets located in Wales (46% by value), the North West (27% by value) and in the Midlands and South East (27% by value). The difference in asset count reflects treatment of co-joined properties.
The senior facility has been provided by the Aviva Investors UK Commercial Real Estate Senior Debt Fund.
In a statement, James Tarry, Fund Manager of the Aviva Investors UK Commercial Real Estate Senior Debt Fund, said: “We are delighted to be working with the team at FIREM on the financing of the Lea Valley portfolio. They know the portfolio well, having owned and managed it for the past decade, and it offers strong diversification.”
The mezzanine facility was provided by Pramerica Real Estate Investors on behalf of its investors.
Pramerica’s head of UK, Andrew Macland, said: “I am very pleased to be supporting FIREM in their strategy for a unique portfolio which has great potential following this recapitalization. We look forward to continuing to provide bespoke capital solutions to active asset managers across Europe.”