UK-Chinese JV acquires regional shopping centre for €433m

A joint venture between The Crown Estate and Chinese state-owned fund Gingko Tree Investment has acquired Fosse Shopping Park in the UK city of Leicester for £345.5 mln (€433 mln).

The vendor was Foyleside, a property company owned by private Northern Irish shareholders with a portfolio of shopping centres in the UK and Ireland.

In May 2014, Abbey Group and the Foyleside Group instructed Savills to market a collection of eight shopping centres - including Fosse Shopping Park - known as Project Swallowtail for a guide price in excess of £710 mln (€870 mln).

Earlier this week UK REIT NewRiver Retail exchanged contracts to acquire three of the assets for £140 million, a new initial yield of 8%. The transaction covered the 27,000 m2 Priory Meadow, Hastings, East Sussex; The Avenue (18,700 m2) in Newton Mearns and the 24,500 m2 Abbey Centre in Newtonabbey, Northern Ireland.

FOSSE PARK
Fosse Shopping Park was the largest asset in the Swallowtail portfolio. It opened 25 years ago and comprises 55,750 m2 of retail space and 2,500 free parking spaces. It has an annual footfall of over eight million shoppers.

The deal further underscores the appetite of Chinese investors to expand their real estate portfolios overseas. London has been the most notable magnet for this capital so far, capturing $2.3 bn of the $5.4 bn (€4 bn) invested abroad in the first half of this year by Chinese players, according to research from JLL. China Construction Bank, China Overseas Holdings and China Life all bought core CBD office assets in Q2. Other Chinese players actively scouring the market include insurer PingAn and developer Dalian Wanda.

London aside, the UK regional market has also generated interest from both institutional and private Chinese buyers across sectors, JLL said. ‘This is a trend that we expect to continue as investors seek value both in the UK and in European markets.’

For The Crown Estate, which manages the British monarch’s property holdings, the joint venture with Ginko Tree Investment represents its third major joint venture in recent years. The company’s first partnership was with Norwegian pension fund Norges on London’s Regent Street and the second with Canada’s Oxford Properties to revamp the St James district.

Tim Vallance, head of retail and leisure at JLL commented: ‘Real opportunities exist to further develop Fosse, to create increased critical mass and destination appeal and to provide a relevant retail and leisure offer that is aligned with changing consumer and retailer requirements. The Crown Estate has a strong track record of redefining retail places, typified by its transformation of the Regent Street and St. James Estates in London.’

Gingko Tree was incorporated as a UK company in 2009 and is run from the City of London offices of the People’s Bank of China on behalf of its sole shareholder, the Investment Company of the People’s Republic of China.

Last year, it was the most active Chinese buyer of European real estate, acquiring 16 properties for €1.82 bn. Its acquisitions included the Adlerwerke office building in Frankfurt in partnership with Pramerica Real Estate for €111 mln.

Foyleside has assets under management of around £558 mln. In May it instructed Savills to

The company owns the shopping centre of the same name in Londonderry as well as Forestside and Abbey Centre in Belfast.