Shadow of Moor Park looms over German sale-and-leaseback industry

Flickers of recognition rippled through the nascent German sale-and-leaseback industry last week with news that UK private equity group Moor Park Capital Partners is to be the exclusive service provider in Europe for a new US REIT, American Realty Capital Global Trust.  The REIT, which was established at the end of 2012, plans to deploy up to 40% of the equity it has raised into European projects, with the initial focus on the UK, France and Germany.

In Germany, Moor Park is primarily remembered for its sale-and-leaseback acquisition of about 100 stores and other property assets of the well-known Max Bahr chain of home improvement outlets, which we reported on extensively in REFIRE at the time, we remember. The Max Bahr business has gone through turbulent times in the meantime, and the majority of those stores, and the stores’ beneficial owners, are currently in insolvency administration, although it’s still not entirely clear who stands where.

In April 2012 a company called Moor Park MB OHG & Co. MB RE, which acted as the landlord for 68 of the Max Bahr stores, filed for insolvency, and court proceedings began in September last year. According to insolvency administrators Brinkmann & Partner in Hamburg, Moor Park in the UK is still the ultimate owner, via a myriad of subsidiary companies, of the landlord company, but no longer the legal owner of the title to the land – and hence the ultimate owner of the properties. This, apparently, is Royal Bank of Scotland, which inherited the assets when it took over ABN Amro Bank in the heady days before the financial crisis.

A spokesperson for Moor Park in London confirmed to the media last week that a Moor Park consortium “had been invested in Max Bahr and had made good returns”, before exiting from the investment in September 2007 in the course of a refinancing by ABN Amro.  “This exit was absolutely not the reason for the insolvency of the Max Bahr properties, which was due to the global downturn of markets, which led to the assets being depreciated in value.” The spokesperson added that Moor Park is still active in Germany and the Netherlands through its investment in Accor Hotels, a number of which it also manages through its asset management arm.

Its latest big tie-up with the American REIT means Moor Park is likely to return with an even larger footprint to the German market. The new REIT said in a statement that its goal is to build a diversified portfolio of sale-and-leaseback transactions with a diversified credit risk, aiming primarily to acquire single-tenant commercial properties with long-term triple-net leases across different sectors and European markets.

This is likely to mean transaction sizes of between €5m and €75m, with overall loan-to-value ratios of no higher than 45% to generate sufficient and predictable cash-flows to support a stable distribution to US retail investors, said the company. Asset types will initially be retail/retail parks/retail warehouse, and industrial logistics, while the secondary priority will be leisure, office, student accommodation and hotel assets.

Giving the rational for its new venture with its US partner, Moor Park said last week that the timing is right, due to several factors. These include the widening of yields between primary and secondary real estate, a significant spread between acquisition yields and the cost of debt financing, the big reduction in real estate investors active in the European market, and the increasing pressure on corporates to free up capital through sale-and-leaseback transactions.

Moor Park describes itself as structuring and managing bespoke investments on a non-discretionary basis on behalf of a pool of investors – both retail and institutional, including sovereign wealth funds, with over GBP 20bn of transactions under its belt. It recently led a consortium of investors in a GBP 700m sale-and-leaseback of 12 hospitals in the UK for Spire Healthcare, the UK’s second-largest private hospital provider.