Ares Management’s purchase of three retail parks from Land Securities is to be financed by Lloyds Banking Group.
Lloyds has agreed a £160m loan for the US private equity firm to finance the purchase of the Team Valley, Gateshead, Kingsway West, Dundee, and Meteor Centre, Derby, retail parks.
Ares was originally battling Frogmore in the bidding process but the firm pulled out, leaving Ares to win with an offer of £260m for the three assets.
The facility, which is due to complete in December, reflects a loan-to-value ratio of around 60%. The senior loan is on a five-year term.
Other banks that considered the deal priced it at around 230bps over Libor, reflecting the regional nature of the assets.
Lloyds is understood to have worked with Ares on the bidding process from the earliest stages. This has become an increasingly common occurrence as sellers seek assurance on the ability of even the largest investors to fund purchases.
In striking a deal the two companies have further cemented a relationship that has seen them work together at least twice this year.
In April Lloyds’ development finance team put together a three-year, £89m package for Ares’ and partner London Square’s purchase of the Star & Garter building and Ancaster House in Richmond, south-west London.
The sale of the three retail parks by Land Securities forms part of the REIT’s repositioning of its retail portfolio into prime regionally dominant shopping centres.
Lloyds declined to comment.
