Los Angeles-based manager Ares Management Corporation has issued a £186 million (€211 million) loan to GreenPoint Partners, the management firm launched by ex-Macquarie real estate boss Chris Green, for the acquisition of a UK car park portfolio.
The facility provided by Ares to GreenPoint is for the acquisition of 37 assets leased long term to one of the largest UK car parking operators, National Car Parks. They comprise nearly 15,000 spaces in city centre locations across London, Manchester, Liverpool, Bristol and Birmingham.
Ares assembled its European real estate lending team last year, appointing former managing director at US private equity firm Carlyle, Philip Moore, as partner to lead it.
Speaking to Real Estate Capital Europe, Moore explained that he had observed the NCP portfolio for several years, seeing it trade hands from managers Blackstone to Davidson Kempner and then to GreenPoint. The firm sees the asset class as an attractive “adjacent” sector to residential, hospitality and leisure, he added.
Ares saw moderate competition from non-bank lenders to provide the financing, in part because it was a new acquisition.
“We’re seeing muted transaction activity when it comes to acquisitions, because there’s still a big ask-spread between buyers and sellers. So, it’s quite rare to finance assets that are being bought at a rebased price. That did generate some competition,” Moore said, adding that he believed the firm’s reputation in the real estate space gave the borrower a sense of security.
Moore did not disclose which funds the firm is lending from. However, according to documents seen by Real Estate Capital Europe, the Los Angeles manager filed two funds in Luxembourg last year: the Ares European Real Estate Enhanced Debt Fund and Ares European Real Estate Secured Debt Fund.
Since the inception of its European real estate lending team, Ares has originated approximately €800 million loans in Europe, including this latest transaction.
Moore explained, more broadly, that there is a growing opportunity to issue debt in the current market climate given the volume of commercial real estate loan maturities coming to an end in the next few years. “If you think about European commercial real estate loans – they’re usually three-to-five-year floating rate loans,” he said. “Every year, you have 25 percent to 30 percent of the whole market which needs to be refinanced.
“All the banks used to be able to refinance their existing exposures or roll on the loans. That’s very difficult now because base rates have gone up 300 or 400 basis points. These loans would have been hedged to their initial maturities. Once you hit those maturities, the interest rate hedges expire. And so, the interest payable effectively can double overnight.”
Ares focuses on providing “conservatively” leveraged whole loans to borrowers in Western Europe. At the moment, the firm sees an equal balance of opportunity between the UK and the rest of the continent but expects the opportunity across Western Europe to grow over the short to medium term.
Moreover, in January, Real Estate Capital Europe reported that the shortfall between the original principal volume of real estate loans due to mature in the UK, France and Germany during 2023-25, and the amount of new financing available to repay it, is estimated to be as much as €51 billion during the period, due to faster-than-anticipated declines in collateral values resulting in lenders making even less capital available to borrowers at refinancing.
Meanwhile, affiliate publication PERE reported earlier this month that GreenPoint is fundraising for a targeted $1 billion vehicle, which is understood to comprise a traditional commingled fund alongside a programmatic joint venture for direct co-investments, called GreenPoint Real Estate Private Equity I. The purchase of the NCP car parks portfolio is among its first three investments.