Brookfield Asset Management is set to refinance a portion of the debt tied to UK-based holiday village operator Center Parcs in a deal that will allow it to reduce its interest rate margins, Bisnow reported.
Center Parcs will issue two tranches of bonds totalling £648 million, which will be utilized to repay £440 million of existing bonds, invest in the company, and distribute earnings to shareholders. The interest rate margins for the new bonds are set at 5.9 per cent and 6.1 per cent, a decrease from the 7.2 per cent margin on the previous £440 million bonds issued in 2012.
A Brookfield-managed fund acquired the holiday park firm for £2.4 billion in 2015 and reportedly attempted to sell it for between £3 billion and £3.5 billion in late 2019 before the pandemic halted the sale process. In 2022, reports suggested Barclays and PwC had been appointed to facilitate a potential £4 billion sale, although no transaction has materialized yet.
Why it matters
Brookfield’s refinancing at lower interest rates is a significant development as it signals not just continued confidence in the sector, but also a positive trend in the hotel sector’s financial landscape as interest rates skyrocket.