AREA and Aviva invest £65m in The Junction

Apollo European Real Estate Fund III, managed by pan-European fund management group AREA Property Partners (AREA), has acquired a 40% stake in The Junction Fund for approximately £50 mln (EUR 56.7 mln).

Aviva Investors, a major existing shareholder, has also invested a further £15 mln. The units will be acquired by way of a secondary rights issue from existing investors that include Aviva Investors, Capital & Regional and Hermes.

A new company controlled by AREA but including representatives from Aviva Investors, Capital & Regional and Hermes will be formed to undertake strategic asset management of the portfolio. Capital & Regional will continue as property managers, overseeing day-to-day management, leasing and development activity.

The Junction Fund is one of the UK's leading retail warehouse portfolios. The new investment will be used to both reduce the levels of current debt and as working capital for on-going portfolio improvements and marketing. The portfolio comprises 11 retail warehouse parks located throughout the UK, including Bristol, Hull, Swansea, Telford and Thurrock. The properties total in excess of three million sq ft (278,709 m2), with more than 50 separate tenants, including substantial occupation by B&Q, DSG, Comet and Homebase.

'We are investing in a sector which, we believe, has been over-sold during the past year but is fundamentally sound and sustainable over the longer term,' William Benjamin, Managing Partner of AREA Property Partners, said. 'The properties are well located, well leased and diversified with good prospects for improvement through asset management. Together with our strong and experienced partners, we are confident that this will prove a highly fruitful partnership.'