Oaktree launches £350m MEPC mandate

Oaktree Capital Management has begun a search for around £350m of debt for its purchase of three business parks from MEPC.

The US private equity firm agreed a deal earlier this month to buy the parks alongside asset manager Patrizia for around £435m.

It is looking for around an 80% loan-to-value arrangement which could be provided as either a whole loan or by a senior lender providing the first 65% and a junior lender providing the subsequent 15% mezzanine tranche. A five-year loan is expected to be agreed at an overall margin of below 150 basis points.

The portfolio includes Chineham Park in Basingstoke, Hampshire; Birchwood Park in Warrington, Cheshire; and Hillington Park in Glasgow that together provide 4m sq ft of space. There are considerable development opportunities available throughout the portfolio but the facility being sought will only be used for the initial purchase and any funding for these will be sought separately.

The initial cash purchase of the portfolio is expected to complete within the next two weeks with a funding deal completing in mid-September.  This would coincidentally be at around the same time as the Scottish independence referendum on 18 September. Should there be a “Yes” vote in favour of independence it is understood that the borrowers and lenders expect that thevaluation of the Hillington asset might be adversely affected, but finalising the finance is not expected to be deliberately delayed until after the vote.

Oaktree and Patrizia’s purchase of the MEPC portfolio follows on from their £245m purchase of the IQ Winnersh business park near Reading in August last year from Segro. It was financed using a £175m loan from Barclays Bank, which subsequently sold a £35m mezzanine tranche to Europa Capital.