Opportunity fund manager Mountgrange Investment Management is set to buy one of the biggest regional property portfolios put up for sale since the beginning of the downturn.
Mountgrange is understood to be the frontrunner for Henderson Global Investors’ Mercury portfolio. A sale at £184m — a yield of 9%-10% — is not finalised, but could be ratified as early as next week.
Mountgrange has beaten opportunistic buyers such as Palmer Capital, Rowan Asset Management, JP Morgan Investment Management and F&C Reit Asset Management to the portfolio.
The sale highlights the appetite for high-yielding assets with the potential for asset management, even as many investors shy away from investing outside London and the south-east.
It is also a key milestone for Henderson, which has been working for almost four years to restructure the fund that holds the portfolio and its debt facility.
Mercury comprises 23 properties across the UK, roughly a third of which are offices, a third industrial and a third retail warehousing. It makes up the remains of the Caspar fund, which Henderson set up in 2004 and managed. When it was set up Caspar’s 64 assets were valued at £710m. Debt of £587m gave it a loan-to-value ratio of 84%.
But as the downturn hit the value of the assets fell, and the fund went into negative equity.
Henderson has asset managed and sold properties to reduce the gearing and improve values.