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Oaktree launches £270m MEPC mandate

The New York-headquartered distressed specialist and German-based asset manager Patrizia are seeking debt for three UK business parks they agreed to buy this month.

Oaktree Capital Management has begun a search for around £270 million (€347.6 million; $467 million) 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 £435 million.

It is looking for around an 80 percent loan-to-value arrangement which could be provided as either a whole loan or by a senior lender providing the first 65 percent and a junior lender providing the subsequent 15 percent 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 the valuation 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 £245 million purchase of the IQ Winnersh business park near Reading in August last year from Segro. It was financed using a £175 million loan from Barclays Bank, which subsequently sold a £35 million mezzanine tranche to Europa Capital.