PREF sheds EUR 300m retail portfolio across Europe

Closed-end European out-of-town retail property fund PREF is selling five European retail parks, as well as a 41% stake in the Spanish regional shopping centre, Nueva Condomina in Murcia to Henderson European Retail Property Fund (Herald). In a statement, PREF said that the transaction price comes to a total of EUR 300 mln.

The retail parks, located in Italy, Belgium and Switzerland, are being acquired for EUR 154 mln, reflecting a combined net initial yield of 5.2%. The stake in Nueva Condomina, representing 50% of PREF's stake in the mall, is being sold for EUR 143 mln, or a net initial yield of 4.5%. British Land and PREF jointly bought the scheme in March 2007 for EUR 350 mln. British Land is retaining its 17.5% direct holding in the Nueva Condomina joint venture while PREF, which is owned 40% by British Land, and Herald will each own 41.25% of the 120,000 m² shopping centre and retail park. Nueva Condomina will be jointly managed by Herald and British Land European Fund Management.

'This off-market sale by PREF to Herald is a win-win for both sides insofar as we are able to crystallise some healthy returns to our investors on properties acquired over the last four years. It boosts our available buying firepower from a previous EUR 200 mln to circa EUR 500 mln, ready for selective opportunistic purchases that we feel will arise from prevailing economic conditions in the forthcoming year,' said Valentine Beresford, director at British Land European Fund Management. 'It also enables PREF to focus on its core countries while reducing the fund's exposure to a large, single asset. The transaction plays to Herald's return criteria and is in line with their strategy to expand in Europe'.

The retail parks, totalling 70,527 m2, consist of the 13,240 m² Parco Commerciale Navile, in Bologna, Italy; the 31,039 m² Parc de L’Hydrion, in Arlon, Belgium; the 7,174 m² Hedera Retail Park, in Roeselare, Belgium; the 6,746 m² Grosses Terres Retail Park, Etoy, in Switzerland and the 12,328 m² Champs Fleuris Retail Park, Matran, in Switzerland.

'This acquisition follows Herald's second closing in November last year and brings the value of the fund to over EUR 1 bn, putting it firmly on course to meet its target value of EUR 1.5 bn. The portfolio fits the fund's strategy as these are well-located property investments with strong asset management potential', said Herald fund manager Paddy Bingham.

Cushman Wakefield advised PREF; CB Richard Ellis acted for Herald.