AshbyCapital, PBB Deutsche Pfandbriefbank (PBB) and Aareal have jointly underwritten a £90m debt facility to refinance a West Midlands retail park owned by MDM Asset Management and Hana Securities.
Incumbent lenders Aareal and PBB have issued a senior loan secured against Gallagher Shopping Park in Wednesbury, with AshbyCapital providing a £20m mezzanine and capex loan. The total debt package represents a loan-to-value of less than 70%.
Ashby's debt plans
The three-year fixed-rate £20m mezzanine loan provided by AshbyCapital’s group company Desert View Ltd is the platform’s first debt financing. An experienced equity investor, AshbyCapital set up a debt platform for Desert View under the AshbyCapital banner to provide mezzanine and development finance earlier this year. It is understood that Ashby Capital will lend from Desert View’s balance sheet at fixed rates, targeting opportunities between £10m and £50m.
“Amid more challenging market conditions than we have seen in recent years, a significant opportunity has presented itself in real estate debt, which is looking increasingly attractive due to revaluations and rising interest rates.
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Using our extensive knowledge of the real estate industry to source the best opportunities with high-quality sponsors, we are delighted to have made our debut with this three-year loan facility, which will allow Hana Securities to work through the next stage of this high-performing asset's lifecycle.
AshbyCapital is an experienced retail park investor, but also has an established track record of investing in office schemes and mixed-use developments.
Well-established partnership
PBB is no stranger to Gallagher Shopping Park, having provided Hana with a loan to finance its £175m purchase in 2018. At the time, the loan reflected a loan-to-value of just over 60%, suggesting that the quantum sat at around £110m. PBB also lent to previous park owners Quadrant Estates and KKR, when they purchased it in three phases back in 2014 for a combined price of £123m. Quadrant remains the asset manager.
A spokesperson from Hana Securities said: "The challenges we confront in global real estate markets today are multi-faceted, and there is downward pressure on asset values. For Hana Securities, the best strategy to protect our global investments is to be proactive by demonstrating resilience and trusting our partners to confidently navigate the challenges we face.”
"We were pleased to see Quadrant and MDM Asset Management, in collaboration with CBRE, doing just that by successfully concluding the refinancing of Gallagher Retail Park and securing our position in this prime retail asset."
Chris Gow, head of debt and structured finance at CBRE, which advised the borrower, said the refinancing attracted strong interest from lenders.
He said: "The robust performance of the asset and strong income generation recorded throughout the period of ownership resulted in several offers being brought forward and furthermore, we have been able to structure an attractive facility to ensure our client will benefit from future asset management potential."
Christopher Daniel, founding partner at Quadrant, added: "Despite the retail headwinds the park has remained relevant and continues to attract both shoppers and retailer interest. We now look forward to working with our partners to continue to enhance the park over the coming years."
Note: In respect of the “AshbyCapital” debt platform, AshbyCapital LLP acts as investment advisor to its group company Desert View Ltd (incorporated in Jersey, registered number 113030) (“Desert View”) and Desert View’s subsidiary companies. As such, AshbyCapital LLP does not itself carry on a lending business and the lending advisory services provided by AshbyCapital LLP to Desert View as a member of its group do not require AshbyCapital LLP to be authorised by the FCA. All loans made by the “AshbyCapital” debt platform are made by Desert View or its subsidiary companies.