Land Securities and Delancey are set to almost double the value of their £300m Metro Shopping Fund with their first acquisition.
The jv, which was set up last June, is the favourite to buy the 525,000 sq ft (49,000 sq m) Southside shopping centre in Wandsworth, SW18, after bids were called in yesterday.
It will be the first new product for the fund, which is currently made up of existing LandSec/Delancey assets.
The centre, owned by Apollo Real Estate Advisors, Portfolio Holdings and Deutsche Bank, was put up for sale earlier this year with a £200m price-tag, reflecting an initial yield of 4.7%.
Tim Haden-Scott, investment director at Delancey, confirmed that the group had been looking at Southside. “Something of this lot size could take the fund to the next level,” he said.
The sellers are in line to make around £80m profit on the deal. The Apollo group paid £40m for Southside in 2000 and spent £70m in refurbishing it.
Haden-Scott said Southside would fit well with the holdings in the fund, which include Delancey’s Shopstop in Clapham Junction, SW11, the N1 Centre in Islington, Victoria Place, SW1, and LandSec’s holdings in Notting Hill Gate, W11.
US-based real estate investment trust Mills Corporation was a bidder, as was Westfield, a private Irish investor, and Standard Life, which teamed up with Insight. Morley Fund Management decided not to bid.
The centre is expected to achieve close to its asking price, but insiders said offers would not be submitted much higher than the £200m quoted. “To put in an offer over the asking price would be pretty unusual in this case, unless you really wanted to make a point,” said one.
Strutt & Parker is representing the vendors.
l Northern Irish property investor William Ewart, who this week lost out on the BP Pension Fund’s Knightsbridge estate, SW1, has fought off competition from 19 other investors to buy the 100,000 sq ft (93,000sq m) Bowen Square shopping centre in Daventry, Northants, from Halladale. Ewart will pay more than £21.5m, an initial yield of 5.75%. Reid Rose Gregory and Jarvie Bedhall Dixon marketed the centre for £18.7m.
References: EGi News 22/04/05
