US private equity firm Centerbridge Partners is aiming to buy Blackstone and Royal Bank of Scotland’s £500m NCP portfolio to complement its other investments in the parking sector.
The firm also owns Apcoa, the parking company operating in 15 countries across Europe, with 80 sites in the UK. Centerbridge took control of the company in 2014 having bought into its corporate debt.
Global investment management firm Davidson Kempner is also competing to buy the NCP portfolio of 88 car parks. A consortium of PGIM Real Estate, Delancey and First Alliance Properties, has dropped out of the running. Angelo Gordon and Apollo also showed initial interest.
The assets are the last in the Isobel workout vehicle established by Blackstone and RBS in 2011, which contained £1.4bn of distressed loans issued by the bank.
Blackstone has been managing the vehicle, with 75% of the proceeds from sales returned to RBS and the remaining 25% split between Blackstone and other lenders to the structure.
Some of the most valuable assets in the original 127-strong NCP portfolio have already been sold. These included a car park on Carrington Street, W1, with potential for a £500m redevelopment project. It was bought by the Reuben brothers last year for £75m.
The portfolio was previously held in a special-purpose vehicle called Powerfocal, owned by a consortium of investors fronted by Delek Global Real Estate.
CBRE and Goldman Sachs are advising Centerbridge; Knight Frank is acting for Blackstone; Cushman & Wakefield is advising Davidson Kempner; JLL is acting for PGIM; Savills is advising Delancey.
The NCP portfolio – attractions and concerns
The NCP portfolio generates an income of almost £35m pa and is let on leases of more than 20 years with 3% annual uplifts in rent.
Many of the 88 sites are centrally located in strong regional centres and have development potential for more valuable uses. Others trade strongly as car parks. As they are relatively easy to manage, individual sites could be sold off to local investors.
Keenness of bidders has been determined largely by their view on the potential upside of the development projects, which have varied widely.
NCP’s covenant is not seen as universally attractive among investors. The company is due to refinance £140m of corporate senior debt in 2018, which, when issued in 2012, reflected a loan-to-value ratio of 80%.
The company is owned by Macquarie’s European Infrastructure Fund II, which was raised in 2006 and is expected to exit in the medium term.
Who is Centerbridge Partners?
Centerbridge Partners is a private equity firm established in 2005 focused on distressed securities and leveraged buyouts. Headquartered in New York, it was founded by Jeffrey Aronson and Mark Gallogly, formerly of Angelo Gordon and Blackstone respectively.
The firm manages around $25bn (£19m) of assets and in 2014 raised $6bn for its third fund. Its European operation is run from its London office, headed by Lance West. Former Citi banker Steven Skaaar is head of European real estate.
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