Carlyle refinances European factory outlet company

The Carlyle Group has received fresh investment from an unnamed sovereign wealth fund for portfolio company, Freeport, which develops factory outlet centres in Europe.

The Carlyle Group has refinanced one of its a European real estate portfolio companies, Freeport, which develops and operates outlet malls.

The US private equity firm declined to name its new capital source, though it did say it was a sovereign wealth fund hailing from the Middle East.

Though the company did not add further detail, The Carlyle Group last said it had previously refinanced Freeport in October 2009 via Bank of America Merrill Lynch (BAML) via a €172.5 million facility for five years. Carlyle said then that the loan would help Freeport look for acquisitions.  

BAML was the original lender to Carlyle when it took over Freeport in 2007 – an acquisition that Carlyle actually attempted to pull out of at the time. But since owning it, Carlyle said Freeport had seen significant success in its performance, growing revenues and income every year.

It said full year results for its financial year ending June 2011 had shown its best ever profitability, with a 22 percent increase in net income over 2010 and year- on- year growth since its buyout of more than 30 percent.

“This has been driven by asset management initiatives increasing occupancy income to record levels across all centres, with particularly strong results at Kungsbacka in Sweden, which increased net income by 35 percent in 2011. Average occupancy across the three centres stands at over 98 percent,” said the company.

As well as refinancing the acquisition cost, Carlyle said its new Middle Eastern backer had created a new company, Freeport Retail, to provide specialist outsourced asset management services. So far, Freeport Retail has taken over the management of the Ringsted Outlet near Copenhagen, which is owned by TK Development AS and The Miller Group.

Robert Hodges, managing director, Carlyle European Real Estate, said: “The new investment that we have secured for Freeport underpins its strong position in the European outlet mall sector.”

Iestyn Roberts, chief executive of Freeport added: “Since Carlyle acquired Freeport, we have successfully undertaken a major turnaround and emerged from the recession in a strong position to maximise the opportunity that we currently see in the European outlet mall sector, which has shown resilience throughout the prolonged economic slowdown that has affected other areas of retail.”