Winnersh: BMO set to buy £355m Winnersh Triangle

Oaktree and Patrizia brought the park to market in March of 2016 via JLL seeking circa £375m, a 6.4% net initial yield and a reversionary yield of 7.1%. The partners have been seeking buyers for a number of assets in their portfolio including Watchmoor Park in Camberley and Warrington Business Park.

The price set to be secured for Winnersh Triangle represents a significant mark up to the £245.1m Oaktree Capital Management and Patrizia paid to buy the then IQ Winnersh from SEGRO in July of 2013 and reflects the subsequent improving investment market, a number of asset management initiatives and lettings and what is understood to be circa £60m of capital expenditure on the construction of two further significant office buildings and public realm improvements and the acquisition of a further office building 100 Berkshire Place adjoining the park.

BMO is understood to have seen off interest from ARES and Benson Elliott.

Global Asset Management, a wholly-owned subsidiary of Bank of Montreal, took 100% control of BMO Real Estate Partners – the former F&C/REIT – in March, in a deal that saw Leo Noé, the chairman who is synonymous with the business he founded, and Ivor Smith, partner and member of the BMO REP board, retire from the Board and sell their stakes. Noé and Smith, together with trusts settled for the benefit of certain members of their families, sold their aggregate 30% interest in BMO REP to F&C Asset Management (part of BMO Global Asset Management and an existing 70% partner). As part of the transaction a portion of the BMO REP business was demerged. This consists of the UK Value Add assets that include contracts for the management of Noé family trust assets. With effect from August 2017 this part of the business will return to Leo Noé and his family and it is this part that is understood to buying Winnersh. CBRE is advising BMO and Noé.

In September of 2013 Oaktree and Patrizia financed the acquisition with a five-year whole loan for around £175m from Barclays Bank concluding a hugely competitive financing mandate capped by the shallowest mezzanine pricing seen at the time. Oaktree, the 95%-majority equity partner in the joint venture with Patrizia, extended its own decision time-frame in part due to the surprising volume of competition and unexpected tightening in lending terms which emerged during the process. SEGRO, the industrial REIT which brought IQ Winnersh to market in the March of that year, put an asking price of £225m on the 1.27m sq ft Reading business park. The asking price reflected the carrying value of IQ Winnersh, with a valuation dated to the end of December 2012. 

Over the first half of 2013, values rose and the Oaktree-led joint venture paid £20m, or an 8.9% premium to the asking price, reflecting a 5.8% net initial yield. Patrizia, whose 5% stake amounts to just over €3.5m of committed equity, reported in its second quarter results that year that the joint venture partners consider the average rents across the portfolio are low, relative to the recovery in rental values.

The sale included four hectares of adjacent development land, providing opportunity to add value over the long term through developing new space to expand the tenant mix. The park is expected to benefit from Crossrail, the new East to West railway line across London and the suburbs, which will be completed by 2018.

In May 2014 CoStar News revealed that Oaktree and Patrizia had prelet around 70,000 sq ft of offices and research and development space to Rockwell Collins at the park. In October of 2015 Patrizia UK, the manager of Winnersh Triangle began the speculative redevelopment of 220 Wharfedale Road, a 52,043 sq ft office at the business park near Reading.

Winnersh Triangle is home to over 60 brands that employ 4,000 people. Businesses on site include Jacobs (UK) Ltd, Virgin Media, BMC, Microchip, Grant Thornton, Lloyds Bank, WH Smith and Bang & Olufsen (UK) Ltd.

JLL declined to comment. CBRE declined to comment.