Australian fund takes £114m hit on shopping centre deal
SHOPPING centre investor Intu has taken sole ownership of its Merry Hill shoping centre after buying out its co-owner for £410m.
The Queensland Investment Corporation paid £524m for a 50% stake in 2007, and had been seeking a buyer for more than a year after it reviewed its portfolio.
The deal includes the 1.4m sq ft shopping centre, plus a further 300,000 sq ft across two retail parks.
Intu had bought the other 50% stake in March 2014 for £408m from Westfield. It said that an external valuation of the whole of the asset by Cushman & Wakefield prepared in connection with this transaction amounted to £889m.
It attributes the rise in value to 22 new lettings, improving the headline rent in zone A in the centre from £150 to £180 per square foot while tenants have invested around £7m in shop fits in the centre.
David Fischel, intu’s chief executive, said: “Our ownership and asset management to date has provided us with ample evidence of the centre’s upside potential, whatever the outcome of the EU referendum.”
The centre generates a net rental income of £43m and the deal represents an income yield of 5.2%. It is currently 96% let.
A £500m loan has been arranged, with a 2018 maturity, which will replace the current £191m loan facility, maturing in 2017, secured on the 50% originally held. The all-in cost of debt of this new facility is estimated to be around 3%.
