Oaktree makes first major UK retail investment

 Oaktree Capital Management, in partnership with London-based retail real estate investor Capital & Regional, has purchased the Kingfisher Shopping Centre in the English town of Redditch for £130 million (€160 million, $210 million). The deal is said to be the first major UK shopping centre investment by the Los Angeles-based fund manager, which made the acquisition on behalf of one of its funds. The firm’s most recent opportunistic real estate vehicle, OCM Real Estate Opportunities Fund V, closed on $1.025 billion in equity late last year.

“Oaktree is excited by the acquisition of the Kingfisher Centre and its new partnership with Capital & Regional,” said John Brady, Oaktree’s head of global real estate, in a statement. “The acquisition of Kingfisher Centre is reflective of Oaktree’s commitment to increase its dedicated real estate resources focused on the UK and Europe.”

Mark Eagan, a partner at law firm Paul Hastings, which advised Oaktree on the transaction, added: “A kick-off transaction such as this makes the market more aware of Oaktree’s interest in Europe, which leads to increased opportunities for future deals.”

Oaktree invested £42.4 million of equity in the transaction for an 80 percent stake, while Capital & Regional kicked in £10.6 million for a 20 percent stake, according to a statement from Capital & Regional. The Royal Bank of Scotland and Spanish bank Santander will provide the remaining funding for the deal through a five-year, £86 million loan.

Capital & Regional began talks to buy the 27-acre, 1 million-square-foot regional mall from European fund manager Scottish Widows Investment Partnership last September before bringing in Oaktree to help finance the deal. Scottish Widows, a subsidiary of Lloyds Banking Group, acquired the asset from Thornfield Properties in 2004 for £211 million.

In separate news, Scottish Widows announced today that Malcolm Naish, its director of real estate, will be retiring in June. Naish, who had served in that role since joining the asset management company in October 2007, helped to build Scottish Widows’ real estate business to more than £8 billion in assets.