The purchase of a £75m portfolio from Hermes is being backed by GE Capital.
The US financier, which spent £300m on most of MEPC’s small properties portfolio on Monday, is providing debt and equity for an investor’s purchase of the Hermes property.
The portfolio is the rump of the Hermes closed fund, which features Tolworth Tower, the landmark multi-let office building on the A3 in south London. It also includes Bakers Court in Uxbridge, shops in George Street in Altrincham and Connection Industrial estate in Sevenoaks. Total income is £7.6m.
A source close to the deal said it is due to exchange next week. “It was agreed before they moved towards their new strategy,” said the source.
GE Capital’s head of new business, Mervyn Howard, said that GE is considering options for the MEPC portfolio. These include sales, joint ventures with property companies or other investors, or injecting some of the assets into a securitised vehicle.
He said that GE will continue to buy portfolios on its own account, but that the MEPC deal did not signal a move away from its traditional debt and equity funding.
“We are not departing from our traditional route of working with partners in joint ventures. We have no intention of turning ourselves into a property company.”
The MEPC portfolio, bought on a running yield of 7.5%, comprises 191 properties totalling 260,120m2 (2.8m sq ft). Most are located in London and Manchester.
Jones Lang Wootton advised MEPC, while Nelson Bakewell acted for GE Capital.
