Oaktree-Patrizia JV clinches €540m UK business park deal

Funds managed by LA-based Oaktree Capital Management and Germany's Patrizia Immobilien have acquired three mixed-use business parks in the UK. The investment volume of £430 mln (€539 mln) reflects a net initial yield of 7.3%.

The assets are Chineham Park in Basingstoke, southeast England; Birchwood Park in the north-western English city of Warrington and Hillington Park in Glasgow, Scotland.

Vendor Hermes Real Estate confirmed on Monday that it had exchanged contracts to sell the assets from the MEPC portfolio. Hermes was acting on behalf of MEPC which is owned by the British Telecom Pension Fund and the Royal Mail Pension Fund. Hermes itself used to invest on behalf of both pension funds and is still owned by the British Telecom pension fund.

The 38-hectare Chineham Park has 76 tenants over a built area of 75,000 m2 and almost 6 hectares of development land. Birchwood Park in Warrington has 234 tenant leases over a built area of 111,000 m2. The estate covers 50 hectares, with 14 hectares of development land. Hillington Park in Glasgow is an estate of over 108 hectares and a built area of 201,000 m2. There is 27 hectares available for development. The park has 352 leases.

MEPC (formerly Metropolitan Estates & Property Corporation) will continue to manage four business parks including the £500 mln technology park at Silverstone, England. In addition, MEPC will manage the continued expansion of Milton Park with its space in the Oxford-Cambridge ‘Technology Arc’. MEPC has also commenced development at Wellington Place in Leeds.

Rob Brook of Patrizia Immobilien commented: ´This considerable acquisition adds three high quality assets to our expanding UK-wide portfolio. Each of the three parks provide significant development opportunities within growing regional markets, which, working alongside Oaktree, we aim to maximise over the next few years through additional investment and asset management initiatives.'

Hermes Real Estate was represented by JLL, while Strutt & Parker and Ryden acted on behalf of Oaktree and Patrizia Immobilien.

Patricia and Oaktree established a UK business park partnership in 2013. Their first joint acquisition was
the 118,000 m2 IQ Winnersh business park from UK REIT Segro. The investment volume for that deal came to €285 mln.