Capital & Regional has bought Aviva Investors out of a shopping centre fund that both parties founded 12 years ago.

The listed property company will own 91.82% of The Mall fund after buying the 52.04% stake and a further 10.52% interest owned by investment fund Karoo for £213m (€267m).

Capital & Regional intends to convert to a real estate investment trust (REIT) once it has bought the remaining 8% in units – owned by a range of smaller unit holders – before the end of the year.

The company said the fund – which owns six shopping centres and was valued at £684m at the end of March – would “form the cornerstone of a portfolio of dominant community shopping centres in the UK”.

An Aviva Investors spokesman said it would “remain fund manager”.

He said: “We have invested in the Mall fund since inception, but are now planning to invest the capital into other opportunities within our property portfolio.”

The Mall fund was established by clients of Morley Fund Management – before being rebranded Aviva Investors – and Capital & Regional in 2002.

At the time, institutional investors in The Mall fund included Hermes, F&C Asset Management, Norwich Union, Prudential, ING Real Estate, Scottish Widows and Arlington Property Investors.

Capital & Regional today said it is seeking to raise £165m by issuing more than 350,000 shares. The proceeds will be used to fund the acquisition of the two stakes along with “available cash and debt funding”.

Last month, The Mall fund recently refinanced its existing CMBS with a £350m loan – with an additional £25m facility for capital expenditure – from Morgan Stanley.

Capital & Regional said the sale of properties in Germany from its joint venture with Ares would be used for capital expenditure and further UK shopping centre acquisitions.