Brookfield Lines Up £648M UK Refinancing — At A Lower Interest Rate

Brookfield is refinancing a chunk of the debt secured against UK holiday village company Center Parcs in a deal that will allow it to cut its interest rate margins.

Center Parcs is issuing two new chunks of bonds totalling £648M, the company said in a statement to bondholders. The new debt will be used to repay £440M of existing bonds, invest in the company and pay a distribution to its shareholders, the statement said. The company is owned by funds managed by Brookfield Asset Management.

The interest rate margins on the two tranches of bonds are 5.9% and 6.1%, compared to a margin of 7.2% on the £440M of bonds that will be repaid. Those bonds were issued in 2012. 

Center Parcs owns five UK holiday villages and one in Ireland, and a report issued alongside the bond issuance said that CBRE valued the five UK villages at £4B at the start of this month. Brookfield and Center Parcs abandoned plans to build a £400M sixth UK village near Gatwick Airport on the outskirts of London earlier this year. 

Brookfield bought Center Parcs for £2.5B in 2015 and put it up for sale for £3-£3.5B at the end of 2019. The sale was aborted because of the pandemic. 

Last year, it appointed Barclays and PwC to handle a potential sale of the business for £4B, but no transaction has yet emerged. 

Center Parcs made a pre-tax profit of £99M in the three quarters to the end of December 2022, the last period for which data is available. That is compared to a £67M profit in the same period the prior year. Occupancy for the nine months to the end of December 2022 was 97%. 

At full occupancy, the company can accommodate 23,000 guests.