UK retail REIT Intu properties has formed a joint venture with Cale Street, an investment firm backed by the Kuwait Investment Office, London, for the shared ownership of Intu Derby.
Cale Street has acquired 50% of the centre with an equity injection valuing its share at £186.3 mln (€216 mln). The deal includes prioritised distributions for the joint venture partners.
Designated Intu chief executive, Matthew Roberts, commented: 'We are pleased to announce our new partnership with Cale Street and look forward to working with them at Intu Derby.
'In what is a challenging investment market, this innovative transaction, which is in line with the December 2018 valuation, shows intu is delivering on its strategy of reducing loan to value through disposals and part-disposals. On a pro-forma basis, we expect the impact of this transaction to reduce our loan to value by around 1%.'
The consideration for the 50% interest is in line with the centre's £372.5 mln valuation, as of December 31 2018, which represents a net initial yield of 6.6%.
The net rental income of the property was £25.2 mln in 2018.
Intu Derby is located in the centre of the same-named city with an annual footfall of 22 million. The 1.3 million ft2 centre was extended and redeveloped in 2007 to provide over 200 units. It includes key retailers such as M&S, Debenhams, Next, H&M, Sainsbury’s, Zara, Hollywood Bowl and Showcase Cinema de Lux.
Intu will continue to manage the centre on behalf of the joint venture. The closing of the transaction will be subject to completing senior debt finance, the discussions for which are well advanced, Intu said.
The shopping centre specialist said that the transaction further advanced Intu’s stated strategy of reducing its debt to assets ratio through disposals, part-disposals and introducing partners to assets.
