£600m Victor has Eye of the Tiger

Lone Star has clinched a deal to buy Project Tiger for approaching £600m, Green Street News can reveal.

The private equity firm has fought off fierce competition from Telereal Trillium to acquire the portfolio from Charles Street Buildings. Having been given a short period of exclusivity at the start of this week, the deal has progressed rapidly, with Lone Star having now signed on the dotted line. 

The suitors for the portfolio are understood to have been attracted by the strongly reversionary nature of the logistics assets, the range of opportunities for enhancement through capex investment, and the quality of the London assets. Lone Star is expected to ultimately break up the portfolio over time as asset management initiatives are completed.

The acquisition will be the first major appointment for James Lock’s Rotation Real Estate, which has been taken on by Lone Star to manage a sub portfolio of Tiger’s industrial assets and maximise their value, with Lone Star’s internal asset manager Hudson Advisors overseeing the remainder. Lock, the highly regarded former Blackstone managing director, established the investment management firm at the start of the year.

Leicester-based Charles Street Buildings, which is owned by the Murphy family, instructed Rothschild to offload the company and its portfolio in April. Rothschild ran a tightly held process that accelerated the sale over the line in the final few days. The 6.3m sq ft portfolio of mixed assets contains a significant industrial weighting, with a major concentration of value in assets the company owns in the East Midlands and London.

By value based on rent, around 60% comes from the industrial assets, while retail parks and supermarkets account for 20%. A selection of key industrial properties within the portfolio are the 575,000 sq ft Thurmaston Industrial Estates and the 525,000 sq ft New Star Road Industrial Estate, both in Leicester, as well as the 1m sq ft Hilltop Industrial Estate in Bardon.

Charles Street Buildings also owns several offices in London – notably on Matthew Parker Street, Jermyn Street and Curzon Street – and in the key regional cities.

Improving Conditions

Lone Star has recently swelled its coffers to deploy into the recovering market. This week it announced the $2.7bn closure of its latest global real estate fund, Lone Star Real Estate Fund VII, which will invest across equity, debt portfolios and operating companies.

The Project Tiger sale is one of best indications of a steadily improving investment market for sizeable, mixed-use portfolios in the UK.

LetterOne concluded a £236m deal to buy the majority of Project Endeavour from British Airways’ New Airways Pension Scheme Pension earlier this year, with improving market conditions apparent in a handful of recent big-ticket processes.

Starwood has agreed a take-private of BCPT and its £900m portfolio, while API is nearing the sale of its £350m portfolio, having determined to wind down the company. Savills and ACRE Capital advised Lone Star.

By Chris Borland and David Hatcher for Green Street News. 12th September 2024