Green Property is to acquire a £400 million sterling-plus (#652 million) portfolio in Britain through its joint venture with the Whitehall Fund. The acquisition comprises a major part of the P&O Steam Navigation Company's British investment property portfolio, containing more than 130 properties, totalling nearly six million square feet, located in England and Scotland.
There are more than 1,200 tenants and the rent roll is £40 million. Almost the entire portfolio consists of commercial properties, with about half in offices, a quarter in retail and a quarter in industrial. It is very heavily clustered in areas such as Glasgow, where it owns several city blocks, Manchester, Birmingham and the western side of London, which make it "very manageable" said Green's managing director, Mr Stephen Vernon. This is Green's largest single purchase of a portfolio. It is also the third which will be traded on. The joint venture company being used to make the acquisition is Whitehall Green Partnership, a 50/50 joint venture with the Whitehall Fund, the real estate investment fund managed and sponsored by Goldman Sachs & Co.
It is highly leveraged. Green and the Whitehall Fund will each put in £35 million in equity. The remainder, which will include costs of some 4 per cent, will be in senior debt provided by J P Morgan. This debt will be off balance sheet for Green, so its only cost will be the equity. Contracts for the purchase have been exchanged. Completion is scheduled to take place in the second quarter of this year.
The deal has a five-year life, so Green can be expected to identify some of the properties in the portfolio for early sale. Green, as the manager of the project, will receive a fee based on the rent and other fees. As it is highly geared, the profit on the investment could be substantial. Some market sources were estimating a possible profit of 100 per cent on the £35 million investment. Green was recently chosen to develop a tax-driven business and technology park in the north Dublin suburb of Ballymun with an end value of at least £1 billion.
