Korean owners secure £90m refinancing for Birmingham shopping centre

The retail park was acquired from KKR in 2018 by a Korea Real Estate Fund

Korean owners of Birmingham shopping centre secure £90m refinancing

Korea’s MDM Asset Management and Hana Securities have secured refinancing worth £90 million for Gallagher Shopping Park, a prime level shopping centre in Birmingham.

UK’s Debt & Structured Finance team at global commercial real estate services company CBRE advised the Korean group on the refinancing.

Gallagher Shopping Park, located northwest of Birmingham at Junction 9 of the M6 in Wednesbury, comprises more than 230,000 sq ft of premium retail space and operates at 100% occupancy.

The Birmingham shopping centre was acquired from KKR in 2018 by a Korea Real Estate Fund sponsored by MDM Asset Management and with Hana Securities as the principal LP.

The asset is managed by retail specialist Quadrant and is one of the West Midland’s dominant schemes.

Incumbent senior lenders Pbb Deutsche Pfandbriefbank (pbb) and Aareal have also extended their existing financing for the asset, with AshbyCapital stepping in to provide a £20m mezzanine and capex facility; the total LTV ratio is under 70%. This is AshbyCapital’s first deal in the debt sector, with its platform focusing on mezzanine and development finance opportunities between £10m and 50m.

Sean Choi, head of Capital Markets at CBRE Korea, commented: “The global economic downturn has arrived at a time when many of Korea’s overseas real estate funds are approaching their maturity and owners are facing a potential loss of equity. A proactive refinancing strategy enables Korean owners to remain in control of their assets and extend their fund maturity until the market stabilizes and values recover. CBRE’s global platform of Debt & Structured Finance professionals means we are well placed to help Korean real estate owners to navigate this period of uncertainty”.

A key personnel from Hana Securities commented: “The challenges we confront in global real estate markets today are multi-faceted, and there is downward pressure on asset values. For Hana Securities, the best strategy to protect our global investments is to be pro-active by demonstrating resilience and trusting our partners to confidently navigate the challenges we face. We were pleased to see Quadrant and MDM Asset Management, in collaboration with CBRE, doing just that by successfully concluding the refinancing of Gallagher Retail Park and securing our position in this prime retail asset”.

Chris Gow, head of Debt & Structured Finance at CBRE UK, commented: “Despite current market conditions and fluctuations in real estate yields, there is still strong debt liquidity for quality assets such as Gallagher Shopping Park. The robust performance of the asset
and strong income generation recorded throughout the period of ownership resulted in several offers being brought forward and furthermore, we have been able to structure an attractive facility to ensure our client will benefit from future asset management potential”.

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