Lend Lease has once again teamed up with Legal & General and Arlington Property Investors, paying £28.2m for a one-third stake in the duo’s Performance Retail Limited Partnership shopping centre fund.
The restructured partnership has simultaneously bought the 234,000 sq ft Cameron Toll shopping centre on Edinburgh’s Lady Road for £84.5m.
Lend Lease’s stake acquistion equates to an initial yield of 5.4% and, based on known rent reviews, an equivalent yield of 6% on the portfolio before gearing.
PRLP will initially have gearing of around 60% secured against assets in the fund.
L&G and Arlington Property Investors, acting on behalf of Strathclyde Pension Fund, initially formed the partnership in 2002. It already owns the Arndale Centre in Eastbourne.
Lend Lease has been aggressively snapping up opportunities for its retail and urban communities arms in the UK in recent times and is understood to see the tie-up with L&G as key to this strategy.
Lend Lease has already worked with Legal & General and Arlington on the 600,000 sq ft redevelopment of Warrington’s Golden Square shopping centre.
The re-structured partnership will have a 12-year initial lifespan and look to buy new shopping centres with “demonstrable added value opportunities”.
Under the partnership, Lend Lease will be responsible for redevelopment of the two shopping centres, including design, construction and leasing.
Lend Lease will also retain development and construction rights for any new centres placed in the fund.
Lend Lease’s chief executive of retail and communities, Ross Taylor, said the partnership offered considerable potential to enhance returns through future redevelopments.
“The UK retail market continues to be a clear strategic focus for Lend Lease and this demonstrates that we are making good headway.”
Jeff Peers, head of development for Lend Lease Retail, said: “Together with the four centres Lend Lease Retail manages, and the current development pipeline including Chapelfield, Golden Square and Park Place, this investment reinforces our UK strategy of actively pursuing new developments and growing our assets under management.“
References: EGi News 02/08/05
