Colony Capital is to finance its winning bid for Project Gemini using a £200m senior loan from Bank of America Merrill Lynch.
The investment bank will supply a five-year loan to the US private equity firm at a margin understood to be almost 400bps over Libor. The high margin reflects the low quality and high vacancy rate of the 24 assets in the portfolio.
The loan represents a relatively modest loan-to-value ratio of 65% of the £310m paid for the portfolio, once owned by Glenn Maud’s Propinvest. Colony had originally sought a lower loan ratio, of around 60% or £180m, for the loan.
It is understood that the need to raise the bid above the asking price of £305m contributed to the need for a higher ratio.
BAML had originally been the underwriter of a Värde Partners bid for Gemini, which fell through at the last minute.
In the end Colony decided to accept BAML’s proposed deal with Värde when it signed the deal last Friday.
BAML will consider both syndicating and securitising the loan.
The portfolio is made up of mainly shopping centres, which are to be asset managed by Ellandi. The largest asset is Martineau Place in Birmingham. Other properties include the Galleries and MarketGate in Wigan, Lancashire, Springfields retail park in Stoke, Staffordshire, the Prescot Centre on Merseyside, Callendar Square shopping centre in Falkirk, and Renfrew retail park, Glasgow.
The assets were sold by CBRE Loan Servicing following a default on the original Barclays CMBS loan to Propinvest.
