Barclays has lent Harbert £96m to fund its acquisition of a portfolio of nine offices across the UK.
The bank provided a four-year whole loan reflecting a 70% loan-to-value on the £137m purchase price. Barclays acted as sole arranger, lender and agent on the facility. It may sell down a junior portion of the loan.
Banks’ appetites to lend on regional UK property has increased markedly over the past year as margins in London have been squeezed. This has led to more competitive terms available for buyers outside the capital and a buoyant investment market.
The assets, known as the Emperor portfolio, have been bought by a special purpose unit trust – HEREF Emperor Holding Property Unit Trust – which is controlled by Harbert’s Harbert European Real Estate Fund III. It is to be asset managed by XLB.
They were sold by the Arlington Business Park Partnership, which is jointly managed by Goodman and Legal & General Property, and are in office parks in regional cities.
The 750,000 sq ft portfolio generates £11.2m of annual income and includes buildings on Solent Business Park, Hatfield Business Park, Edinburgh Broadway Business Park, Glasgow Central Quay Business Park and Leeds Valley Park.
Andy McDonald, vice president in Barclays’ specialist real estate team, said: “We were keen to support the Harbert team in the acquisition of this well-established portfolio which offers meaningful asset management potential in recovering regional markets and follows successes the business has had in similar portfolios.
“Completion of the financing within a short time frame topped off an extremely busy year in which the provision of ‘whole loan’ financing has become a recurring trend, one which we expect to continue in 2015.”
Scott O’Donnell, senior managing director at Harbert Management Europe, added: “We are pleased to have worked with Barclays on a financing structure that provides the flexibility to maximize value.”
The Arlington Business Park Partnership provided the collateral for an £800m CMBS issued by Eurohypo in August 2007 called Epic Opera (Arlington), which was the last to get away before the onset of the credit crunch. Over the past year the fund has sold assets in part to repay the debt and a final payment of £195.8m was made on 28 July last year and the CMBS delisted.
Barclays demonstrated its willingness to lend against regional office portfolios last year when in August it lent £335m to Oaktree Capital Management to fund the purchase of three regional business parks from MEPC. It subsequently sold down a mezzanine tranche of £75m to Highbridge Principal Strategies.