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Tristan Capital Partners wins Project Tree for £153m

Tristan Capital Partners has paid £153.15m to win the Project Tree portfolio out of receivership in a rapidly executed disposal process by KPMG and sales agent JLL.

The Project Tree portfolio is comprised of 144-strong retail with a mixture of high street shops, convenience parades and centres as well as some secondary quality offices, industrial assets and around 250 apartments.

Underbidders included Apollo Global Management and Goldman Sachs Asset Management as well as Catalyst Capital at an earlier round.

Project Tree was originally comprised of retail assets secured by defaulted Aviva Commercial Finance loans, including a 20% concentration in the South East; 21% in the South West and 15% in London.

JLL, appointed sales agent by KPMG, increased the portfolio’s size by adding an additional 19 secondary and tertiary office properties around two weeks prior to the first round bidding deadline, formerly owned by Topland.

Assets included a secondary quality office in Birmingham, a tertiary office block in Croydon, a trading estate in Swindon as well as offices in Southampton and Swindon.

Within the larger retail pool, formerly owned by the Noe family, around two-thirds of the high street shops have had lease events rebasing rents, following the sector’s average fall in rental values since the global financial crisis. The balance has not.

However, there is a concentration of around 21% of the income within the retail component is secured by strong covenants, including Wilkinsons, BHS, Sommerfield and Superdrug.

Across the entire portfolio, the occupancy is 87% and the weighted average unexpired lease term is 5.2 years. The Project Tree portfolio has an annual income of £12.3m, generating a net yield for the portfolio of 10.7%.

Tristan Capital Partners acquired the portfolio through European Property Investors Special Opportunities 3 (EPISO 3), the fund advised by pan-European real estate investment manager.

Peter Mather, managing director at Tristan Capital, said in a statement: “Speed was of the essence in securing this portfolio, which offers plenty of scope to add value through creative asset management in keeping with the fund’s strategy.

“The final close of EPISO3 earlier this year and the compelling business plan for the assets put together by the team within a tight deadline enabled us to transact swiftly to seize this opportunity.”

Tristan Capital has appointed Addington Capital as its asset management partner for the portfolio.

JLL and Berwin Leighton Paisner LLP acted for KPMG. Allsop, DTZ and Mayer Brown International LLP acted for EPISO3.

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