US investor Kennedy Wilson has joined forces with private equity firm Varde to acquire a portfolio of eight secondary shopping centres in England and Scotland out of administration for £250 mln (€300 mln).
US investor Kennedy Wilson has joined forces with private equity firm Varde to acquire a portfolio of eight secondary shopping centres in England and Scotland out of administration for £250 mln (€300 mln).
Beverly Hills, California-based Kennedy Wilson said it is investing £34 mln of equity in the deal, which in total involves an equity contribution of £110 mln and £163 mln of financing.
The deal is understood to crystallise a £110 mln loss for the three-bank syndicate which funded the assets, previously owned by the Britannica fund. The purchase reflects a yield of around 9%.
The shopping centres have outstanding senior debt of £328 mln, which is majority held by ING Bank, while Eurohypo and Deutsche Hypo own a 30% and 10% stake respectively.
Seven of the eight centres have been transferred, with the final centre due to close subject to customary closing conditions. Located throughout England and Scotland, the portfolio of properties totals 2.3 million sq ft, and 85% of its gross income comes from national retailers such as Debenhams, Marks & Spencer, Asda, Tesco, River Island and Primark.
Grant Thornton put the malls for sale in the spring, having been appointed as administrators in September last year.
The Britannica shopping centre fund was established by ING Real Estate Investment Management in 2005 and it originally owned nine assets valued at some £550 mln. CBRE Global Investors inherited the fund's properties in 2011 as part of its $900 mln acquisition of ING REIM’s European funds.
'In addition to asset management upside, there is the opportunity to benefit from improving economic and market conditions, including rental value improvement and yield compression to add value,' said Mary Ricks, president and CEO of Kennedy Wilson Europe. 'We see impressive potential in this investment and look forward to capitalising on strong interest from retailers.'
Kennedy Wilson, together with its institutional partners, has acquired more than $2.6 bn of real estate and real estate-related debt globally since the beginning of 2013, including $1.9 bn in the UK and Ireland.
Earlier this month the company reportedly entered Spain with the purchase of lender Catalunya Bank's real estate arm for €40 mln. The purchase was made in a joint venture with private equity firm Värde Partners.
