DownloadM7 Real Estate is under offer to acquire Goldman Sachs’ 26-strong Omega portfolio for circa £128m, beating off competition including Ares Management and InfraRed Capital Partners.
The sale price reflects a circa 9.2% net initial yield.
The Omega portfolio, comprised of 11 offices, eight industrial assets and seven retail properties throughout the UK over 1.6m sq ft, was acquired piecemeal by Goldman Sachs through a series of transaction from Aberdeen Asset Management and Aviva Investors.
Six first round bids were initial received which was whittled down to three. In addition, Mansford had informally offered to buy the retail and industrial assets only from the Omega portfolio, but Goldman Sachs was looking for a complete portfolio trade.
The Omega portfolio has an annual rent (after top-ups and guarantees) of £12.5m, equating to a modest £9.02 psf, from more than 250 tenants.
The current vacancy rate is 13.14%, or 208,573 sq ft. The portfolio has a WAULT of 5.45 years to expiry and 4.08 years including break options.
M7 will look to add value through standard asset management initiatives such as letting vacant units, re-gearing of existing leases, undertaking rent reviews, removal of break clauses and the development of additional units where possible.
Goldman Sachs, which appointed Knight Frank to sell the Omega portfolio, was seeking offers in excess of £127.75m.
For M7 Real Estate, the purchase will represent its first investment in the UK since April’s joint venture purchase with Oaktree Capital Management of three multi-let office parks in South West and North East England for £16.8m.
This year M7 has largely focussed on investments on the Continent, including, through its range of funds, the purchase of seven light industrial properties in Denmark, two industrial parks in Portugal, a portfolio of 42 assets in the Netherlands across three individual acquisitions, including the Spring portfolio that originated from a non-performing loan.
M7 has opened offices in Lisbon, Portugal and Prague, Czech Republic this year and plans to open further offices in Budapest and Bucharest to cement its presence there Central and Eastern Europe (CEE), which already includes a Warsaw office in Poland.
The significant CEE focus reflects the growing deal flow in the region, both in respect of hard assets and defaulted loans.
In anticipation of the NPL deleveraging by banks CEE banks, and lenders which exposure to the region, M7 has formed a new joint venture with Mount Street Loan Solutions, the European real estate loan servicing firm, called Mount Seven.
All parties declined to comment.