UK RETAIL BRIDGE

OVERVIEW

Novellus were happy to support a bridge to assist a repeat borrower with the acquisition of a prominent Shopping Centre in a prime location.

Utilising the access to private capital and due to the unique nature of the price the asset had been secured at, Novellus were comfortable in the underwriting to provide:

• 80% LTPP (60% LTV)
• Pragmatic and hands on approach to asset management (having experienced professional advisors within our core team helped us greatly to get under the skin of the income and borrowers’ strategy)
• Stretched leverage by utilising a series of loan notes (within the capital stack). However, due to the access to capital, these all happened “behind” the loan documents and as such the borrower was able to have a single facility with one point of contact. All capital came from the same source which also allowed us to seamlessly present that option
• High-quality repeat borrowers with strong experience within the sector
• Loan completed within 28 days from date of enquiry

SUMMARY

Novellus (through a UK company we fund) and directly have supported these borrowers within excess of £40m of borrowing. We are very much aligned as a funding partner and have allocated a further £150m to support the borrower’s aspiration of continuing to buy, asset manage and then look to refinance to hold the asset long term once the income is more stable.

Whilst shopping centres remain somewhat unloved, we have the capability internally to understand the borrowers, the asset, and the opportunity. We have been buyers of retail assets at various times in the past and we feel this experience is key in supporting a fast-moving strategy with a lot of moving parts.

This specific asset has several potential exits from break-up of the centre and selling off some more established income, a longer-term change of use play (STPP) as well as just improving the NOI and securing more optimal lease terms with new and existing tenants. The borrowers have demonstrated a strong ability to asset manage these assets and drive value and the counter-cyclical nature of where these types of assets are trading (to 5-7 years ago) also supports our long-term thinking towards value investing.

Leverage was a key driver alongside a tight time frame and the team worked tirelessly with professional advisors to enable to acquisition to complete.