UK REIT Intu Properties has exchanged contracts to acquire the 50% it did not already own in Merry Hill, a super-regional shopping centre complex in the English West Midlands, for £410 mln (€527 mln) before expenses.
The acquisition from Australia Queensland Investment Corporation (QIC) was expected and Intu confirmed last Thursday that the two sides were in exclusive talks. The confirmation of the deal came a day later.
The investment volume for QIC's 50% share reflects a income yield of 5.2 per cent, based on net rental income of £43 mln, Intu said.
Intu CEO David Fischel commented: 'We are pleased to have been able to acquire the remaining 50% in Intu Merry Hill, some two years after our original 50% acquisition in 2014. Our ownership and asset management to date has provided us with ample evidence of the centre’s upside potential, whatever the outcome of the EU referendum.'
Merry Hill, located 10 kilometres from Birmingham, comprises 130,000 m2 of retail space. The estate also includes two retail parks, office and leisure pace and development land. The centre has around 10,000 car parking spaces and a footfall of 22 million.
Intu said it had arranged a £500 mln loan, with a 2018 maturity, which will replace the current £191 mln loan facility, maturing in 2017, secured on the 50% of Merry Hill originally held. The all-in cost of debt of this new facility is estimated to be around 3%. The balance of the investment volume is to be paid for from Intu’s existing resources.
The acquisition, which is scheduled to complete shortly, is expected to be earnings accretive from completion, the buyer said.
An external valuation of 100% of the asset by Cushman & Wakefield prepared in connection with this transaction amounts to £889 mln, at a nominal equivalent yield of 5.0%.
