Post By: Birchwood Team
Birchwood backs Hillcrest’s West End deal with £100m loan
Sun Capital-backed platform acquires 60 Great Portland Street
What? Hillcrest PERE has bought 60 Great Portland Street.
Why? The investor is deploying into opportunistic real estate from a £250m mandate.
What next? Birchwood Real Estate Capital is backing the deal with a £100m loan, which includes acquisition finance and a future capex component.
Hillcrest PERE has completed the purchase of a West End office for around £85m, locking in a major debt package from Birchwood Real Estate Capital, Green Street News can reveal.
Sun Capital Partners’ Hillcrest PERE platform has bought 60 Great Portland Street from Nuveen, which sold the asset from its Cityhold Office Partnership. The purchase price reflects a net initial yield of around 5.25%.
WR Berkley-backed Birchwood – set up in 2022 by chief executive and former RBS, Blackstone, L&G and Delancey executive Lorna Brown – provided a £100m whole loan to support the purchase. The Birchwood facility includes acquisition finance and a significant capex component, as Hillcrest has planned a building upgrade into its future asset management plan. Art Capital organised the financing deal.
Lorna Brown, chief executive of Birchwood Real Estate Capital, said: “Birchwood is delighted to have provided Hillcrest PERE with an acquisition and capex facility to support their purchase of 60 Great Portland Street.
“This loan is a strong example of our continued commitment to backing top?tier sponsors such as Hillcrest in acquiring high?quality real estate assets underpinned by robust supply?demand fundamentals, and demonstrates our positive approach towards the central London office market generally.”
The 85,000 sq ft building, which occupies a prominent 0.5 acre site in Fitzrovia, was redeveloped by GPE in 2007. The 65,000 sq ft of offices are fully let to The Engine Group for its UK headquarters for another two years. The AIM-listed tenant pays £65/sq ft at 60 Great Portland Street, significantly below the roughly £100/sq ft-plus that has recently been achieved in Fitzrovia.
Sun Capital considers the building a repositioning opportunity to deliver a sustainable headquarters building into a supply-constrained market, either with vacant possession at the lease expiry in 2028, or as a regear scheme delivered for the current tenant. There is also the potential to reposition and extend the existing building.
Sun keeps shining on Hillcrest
Sun Capital formed Hillcrest PERE with backing from Santander in late 2023. The platform has targeted opportunistic real estate acquisitions across the UK since it launched with a £250m equity mandate.
The Hillcrest PERE portfolio also includes a £50m television and media complex at Chiswick Park; Premier House in Twickenham; a Morrisons store in Leeds; a development site in Deptford; and the £20m Arkwright House in Manchester city centre.
CBRE advised Nuveen. For Hillcrest, Savills advised on the investment transaction.
