Capital Shopping Centres has been forced to buy its partner out of its £300m Westgate development in
CSC has paid around £40m to LaSalle Investment Management after the fund manager exercised a so-called “put” option on the scheme.
LIM is understood to have exercised the right to sell back its stake to CSC because it believed that the pre-agreed sum reflected better returns than it was likely to achieve if it were to try to sell out of the scheme in the open market.
The 750,000 sq ft scheme, anchored by John Lewis, has been on hold since July last year. The development – comprising 90 shops, bars and restaurants – got consent in 2006 and was scheduled for completion in 2011. Work has not started.
CSC was unable to comment on the forced acquisition as it is in a closed period. However, the deal is expected to be announced when parent company Liberty International publishes its full-year results on Thursday (26 February).
LIM is one of very few active investors in the market and is expected to use the funds to keep buying distressed assets. Most recently, it bought a retail park in Yeovil from Legal & General for £15m – a 9.25% yield.
Sources said that they did not believe there would be a flood of put options being exercised following the deal.
One said: “It is unlikely that many situations like this will arise, as they relate mainly to developments rather than investment opportunities. Unless the party concerned is forced into action by the other, it is more likely that they will await better market circumstances before negotiating terms and starting development.”
It is unknown whether
The group this week revealed that it was looking at a number of ways to raise equity. It is widely expected to announce a rights issue in a bid to raise cash. Analysts predict that the company could need as much as £500m.
