Pradera completes fund recapitalisation – exclusive

Pradera has completed the recapitalisation of its 2006-vintage retail fund, Pradera European Retail Fund 2, concluding a sale process that took more than a year, sister publication PERE has learned.

The London-based retail real estate manager has sold a six-property portfolio to MCAP Global Finance, a subsidiary of New York-based hedge fund Marathon Asset Management, according to a source familiar with the matter.

The assets, known collectively as the Bronze Portfolio, comprised retail properties in Italy and Spain, including Formia: Itaca Shopping Centre, located approximately 90 kilometres northwest of Naples and Viterbo: Tuscia Shopping Centre, located some 80 kilometres northwest of Rome.

Terms of the transaction were not disclosed.

Marathon acquired the assets through an indirect secondaries transaction, buying the existing holding company that held the properties in lieu of purchasing each PERF2 investor’s units in those assets, the source said.

In taking over the portfolio, the hedge fund will provide an exit for the fund’s limited partners and will also inject additional capital into the properties which had not received significant upgrades since 2010.

Pradera originally had acquired the six assets between 2006 and 2009 through PERF2, which was launched in December 2006 and for which Pradera held a final close in April 2008. The core-plus fund was focused exclusively on the retail property sector in Southern Europe. The fund’s life was initially expected to terminate in December 2016 and was subsequently extended, as the business plans for many of the PERF2 properties had yet to be completed.

Pradera originally had put all nine of PERF2’s assets on the market in June 2016, shortly after it sold a significant minority interest in the company to multi-family office group LJ Partnership. The firm began discussions with Marathon during the fourth quarter of 2016. Three of the properties were ultimately sold in separate transactions.

The overall sale process was delayed by a number of factors, including the Brexit vote, which occurred as the portfolio was coming to market and led some potential bidders to reconsider their European investment strategy. Additionally, the assets in the portfolio had to undergo a series of debt restructurings with a number of lenders.

It is understood that Pradera will continue to serve as asset manager of the Bronze portfolio on behalf of Marathon.

Accord Europe advised Pradera on the deal, while Marathon was self-advised.

Pradera, Marathon and Accord Europe declined to comment.