UK – Strathclyde Pension Fund has exited its shopping centre joint venture with Legal & General Property as it concentrates on direct investments.

The £11.4bn (€13.3bn) local authority pension scheme has sold its one-third stake in the Performance Retail Limited Partnership, a single-asset fund that owns the Arndale shopping centre in Eastbourne, for an undisclosed sum.

The move appears to be prompted by Legal & General Property's plans to expand the retail centre, a development plan that was scaled back in 2011.

DTZ Investment Management, which manages Strathclyde's real estate portfolio, was reluctant to participate in the revived development holding only a minority stake.

"We’re open to development scenarios but in this case, we were a minority shareholder," said David Hyland, investment management director at DTZ Investment Management.

"Separation worked for both parties. If we had 100% control, we might have taken the development forward."

The Performance Retail fund is the last of a number of real estate joint ventures Strathclyde pension fund has exited over the past decade.

Richard McIndoe, head of pensions at Stratchlyde, said the joint-venture structure had not proved "particularly successful" for the pension fund.

"The main thrust has always been direct investment with separate accounts," he said. "Joint ventures were always the exception."

Legal & General Property is pursuing the development of the Eastbourne Arndale Centre because it has identified an investment opportunity specific to the asset and area backed by local demographics.

"You don’t do retail because you want a particular weight in retail but because you believe in a particular story," said Mike Barrie, fund management director at Legal & General Property. "The hurdles to investing in shopping centres are higher than they were."

Boosted by local government backing for the development, Legal & General Property is currently in early-stage talks with a number of local authorities over development projects to regenerate town centres.

Barrie said he saw "synergies" between pension-fund capital and local-authority projects.