Council bids to buy Birchwood Park from Oaktree Patrizia
Warrington Council is in advanced talks to buy Birchwood Park for around £200m in one of the largest property acquisitions in the local authority investment market, as council chiefs battle austerity cuts with bets on rental income.
Birchwood Park is among the best performing business parks in the North of England with 165 tenants in more than 1.25m sq ft, generating about £10m in rent a year and employing 6,000 staff. There are 50 buildings on the park spread across 120 acres, 35 acres of which remain for future development. Amenities include a nursery, gym and conference centre. All management and operational staff would transfer to the council if the deal completes.
The site benefits from the government’s enterprise zone status as part of Cheshire Science Corridor. There is planning permission for a further 750,000 sq ft of offices, industrial or laboratory space.
Around one third of the park’s tenants are nuclear specialists, making it the dominant cluster for the sector in the country.
Council papers due to be published in the next few days are expected to ask members to approve plans for a significant investment in its property portfolio, which would be funded by cheap borrowing open to councils. Warrington’s AA2 credit rating, the second highest available, was recently upheld by Moody’s. The council also access to £150m from a bond to pay for town centre regeneration and housing. The authority’s financial portfolio includes a 33% stake in Redwood, a challenger bank aimed at supporting small businesses in Warrington.
In commercial property, local authorities account for one in three buyers in some parts of the UK property market, according to an investigation by The Times earlier this week. The paper said councils have spent £2.7bn betting on commercial property since 2015, compared with £500m over the previous three years.
Labour-controlled Warrington faces “at least £41m of cuts” to its central government funding in the next three years on top of cuts of £92m by government since 2010.
The council last year acquired the Matalan store and DW Sports Fitness centre on the A49 approach road in to the town centre, and owns units on Warrington Central Trading Estate.
Birchwood Park would be by far its biggest property transaction. The joint venture between Oaktree Capital Management, headquartered in Los Angeles, and Patrizia, the German investment fund, acquired the site from Hermes and MEPC, as part of a portfolio of three business parks, for £430m in 2014 at a yield of 7.3%.
JLL is marketing five Oaktree and Patrizia business parks in the UK. BE Group and JLL are the retained letting agents for Birchwood Park.
Warrington Council said: “The council is unable to comment on any commercially confidential matters, and regrettably is unable to assist further at this time.”
All other parties declined to comment.