PGIM Real Estate Finance has provided a £75.6 million loan to the consortium of South Korean investors which bought Amazon’s new distribution facility in the UK’s East Midlands, Real Estate Capital can reveal.
The five-year loan finances the purchase, agreed in April, of the Bardon Logistics Facility in Leicestershire, which at £125 million was the UK’s largest-ever purchase of a single-let logistics property.
The Korean investors bought the 1 million square foot-plus ‘fulfilment centre’ from Mountpark Logistics, the company launched by sheds veteran John Cutts in 2013, which developed the property. In April, BNP Paribas Real Estate Investment Management (REIM) announced that it had exchanged contracts to buy the property on behalf of an ‘Asian investor’.
Online retailer Amazon pre-let the property on a 15-year lease with fixed increases as it continues its UK expansion drive. The unit serves as the firm’s main UK distribution facility and is expected to put more than 90 percent of the country’s population within a four-hour drive.
The mega-shed sits on a 49-acre site and has capacity to park 225 trucks. It is thought to be one of the largest logistics units in the UK.
BNP Paribas Real Estate with BNP Paribas REIM arranged the transaction. “We were able to secure finance for our client from PGIM Real Estate Finance on competitive terms which matched our investors’ business plan,” commented David Barry, head of debt advisory at BNP Paribas Real Estate.
PGIM Real Estate Finance is a subsidiary of PGIM, the global investment management businesses of US-based Prudential Financial. The business, which was previously known as Pricoa, provides secured senior lending and is led in Europe by Bryan McDonnell. Its investors are the Prudential Financial general account and other third party clients.
“It’s particularly exciting to participate in the evolution of online retail delivery in an increasingly fast-paced world,” said McDonnell.
“Our ability to finance high-quality opportunities like this one gives us a unique opportunity to support investors who are navigating uncertain market conditions, particularly as global interest rates remain low and the impact of Brexit unfolds,” he added.
“Several factors made this an attractive transaction for us, including the strength of the borrower and the long-term prospects for the tenant, Amazon,” said Aaron Knight, a director with PGIM Real Estate Finance’s London office who led the debt transaction. “The property’s location in one of the most strategically important logistics regions of the country added to the loan’s appeal. This is the kind of transaction we hope to replicate.”