Kier Group buys Lloyds' 50% stake in development unit

UK construction and property group Kier has agreed to acquire Lloyds Banking Group's 50% stake in their jointly-owned portfolio of real estate assets for £91 mln (EUR 103 mln).

The transaction price includes £35 mln to be paid in cash on completion, £30 mln to be paid in cash in October 2012 and the remainder to be paid in cash a year later. The consideration, which was based on an independent valuation of the assets, also releases Kier Developments and its subsidiaries from all debt payable to Lloyds Banking Group.

The portfolio of real estate assets includes two prime office buildings in Cavendish Place and Savile Row in central London; a mixture of commercial and residential land in Frimley, Swindon, Southampton, Heathrow, Uxbridge and Ashford; a retail development in Chichester which is currently expected to have been sold by 30 June 2011; and two industrial units in Weybridge, which are expected to be sold shortly, and a further industrial unit in Romford.

Kier intends to pursue a strategy of developing and disposing of the assets, and has re-valued the portfolio accordingly, and as a result expects to generate positive returns from the portfolio. The assets are owned by Kier Developments and its subsidiaries. As a result of the transaction, Kier Property Limited, a subsidiary of Kier, now owns the entire issued share capital of Kier Developments.

Kier Developments owns a portfolio valued at £168 mln.