Kennedy Wilson and Fairfax have refinanced The Rock in Bury, once estimated to be worth more than £270m, with a new loan valuing the shopping centre at £88m.
Aviva Commercial Finance has provided a £53m, 10-year fixed-rate loan, at a loan-to-value of close to 60%, implying a value for the 620,000 sq ft mall of £88m.
The scheme was originally started by Thornfield Ventures with development finance from Bank of Scotland. The bank advanced £270m and Thornfield put in equity of its own.
In 2009 Thornfield fell into administration and the Bank of Scotland loan was transferred to Lloyds when the two banks merged.
The Rock was completed in 2010 under the stewardship of Lloyds, administrator Deloitte and Hammerson acting as asset manager and is anchored by Marks & Spencer and Debenhams.
Kennedy Wilson and Fairfax acquired The Rock through Lloyds’ sale of the Project Forth non-performing loan portfolio in December 2012. They paid around £390m for the £780m loan portfolio.
In addition to the retail centre, Kennedy Wilson and Fairfax also took on 66 completed, rented multi-family units at the scheme and 167 more that were under construction.
Kennedy Wilson and Fairfax formally took ownership of the scheme through an insolvency process in the autumn of 2013 and at the time the duo announced they had realised a profit of $28.8m (£18.1m). Since then the owners have let up the centre and reduced its vacancy from around 10% to 3%.
The financing is the second in quick succession between Kennedy Wilson and Aviva. In December Kenney Wilson’s European listed vehicle, Kennedy Wilson Europe Real Estate, bought a £503m UK mixed-use portfolio known as Project Bridgett and previously controlled by the Noé family, from Aviva. As part of the deal Aviva provided a £352m senior debt facility, reflecting a 70% loan-to-value.
Barry Fowler, managing director of Aviva Commercial Finance said: “We’re very pleased that we’ve been able to refinance this facility in Bury with Kennedy Wilson and Fairfax Financial. We provide debt funding across a number of sectors and this scheme represents a strong, well invested retail proposition that fits well with our appetite for financing high quality assets across the UK.”