Round Hill Capital has drafted in M&G Investments and Och-Ziff to replace AIG as funding partners on its £424m purchase of Blackstone’ Nido portfolio.
The fund management arm of the UK insurer Prudential provided a £266m senior loan for Round Hill’s deal to buy the three-strong student housing portfolio. It was joined by hedge fund Och-Ziff for the £80m mezzanine loan. Both loans are for five years.
The last-minute change edged out insurance giant AIG, which had been lined up since at least March (10 March, p45) to provide £200m of senior debt, alongside a £65m facility from Austrian bank Bawag.
The partners were offering five-year loans at around 325bp over three-month LIBOR.
It is understood that the private equity firm switched from M&G and Bawag to more expensive debt because of M&G and Och-Ziff’s ability to complete the deal quickly as its exclusivity period with Blackstone came to an end.
Contracts for the deal to acquire the schemes, which include 2,507 student beds in King’s Cross, Spitalfields and Notting Hill, were exchanged on Monday night.
M&G Investments has been active in the UK real estate market, and is now working on plans to raise capital from pension funds and insurance companies for a dedicated senior debt fund.
