Oaktree opts for bank finance for UK property deal

Barclays is to provide a whole loan of around £344m to Oaktree to support its acquisition of three UK business parks.

Oaktree Capital Management has chosen a financier to provide a whole loan for its £430 million purchase of three regional UK business parks, PDI sister title Real Estate Capital can reveal.

Barclays is to provide a whole loan of around £344 million, reflecting an 80 percent loan-to-value to the private equity firm. Oaktree had been seeking a five-year loan with a margin of below 150 basis points.

How the loan is ultimately split is still yet to be finalised but it is understood that Barclays is likely to syndicate a 15% mezzanine tranche of around £64.5 million and may also look to syndicate around half of the senior portion.

Barclays is understood to have faced strong competition from the likes of Bank of America Merrill Lynch, which is thought to have been considering a possible CMBS of the senior debt, and Citibank.

Yesterday Oaktree confirmed that it had exchanged contracts to buy the trio of assets alongside German asset manager and property company Patrizia from MEPC for a price that reflected a yield of 7.3 percent.

The 4 million sq ft portfolio includes Chineham Park in Basingstoke, Hampshire; Birchwood Park in Warrington, Cheshire; and Hillington Park in Glasgow. There are considerable development opportunities available throughout the portfolio but the initial facility is being used only to fund the initial purchase.

The deal is Oaktree and Patrizia’s second tie-up with Barclays. In August last year the duo bought IQ Winnershm a business park near Reading for £245 million from Segro for which Barclays provided £175 million of finance. A mezzanine tranche was subsequently sold to Europa Capital.