British Land is set to increase its stake in the £1.5bn Hercules Unit Trust to more than 50%.
The REIT has agreed to purchase £41m of additional units in the 17-strong retail park fund increasing its holdings from 49.2% to 54.2% as part of a scheduled pre-emption process.
In additional to the agreement to buy 5%, BL has submitted an application to fund manager, Schroders, to buy a further £25m of units in HUT which have been tendered as part of this process.
It is paying £613 per unit – a 3.8% discount to NAV – for the additional 5% stake in the trust which owns Glasgow Fort Shopping Park and 50% of Fort Kinnaird Shopping Park, Edinburgh, and generates net rent of £86.5m.
BL said the purchase will be earnings accretive.
When the 5% deal is concluded, HUT will be treated as a subsidiary and consolidated in BL’s accounts from 31 March 2014.
This includes HUT’s debt, all of which is non-recourse to BL. The group’s proportionally consolidated LTV will rise by a maximum of 0.7% to 43% and its statutory LTV will rise by a maximum of 3.4% to 31%.
BL added that it cannot be certain as to how many units it will be successful in acquiring in the tender process above its pre-emptive allocation.
Charles Maudsley, head of retail at British Land, said: “HUT has some of the highest-quality retail parks in the country. The purchase of additional units is in line with our strategy of focusing on retail locations which are the preferred local destination for shoppers, are flexible, affordable and capable of remaining at the heart of retailers’ omni-channel offer.”
bridget.oconnell@estatesgazette.com
