Citigroup Property Investors, a subsidiary of Citigroup Inc. ('Citigroup'), is pleased to announce that it has selected Halladale Group plc ('Halladale'), the UK property co-investment, trading and development company, as a founding co-investment partner and asset manager for the formation of a new UK property fund - CPI Retail Active Management Programme ('CReAM').
CReAM will have an initial spending capacity of approximately £185 million, with an intention to extend to £300 million. It has been created as a Scottish Limited Partnership with both Citigroup and Halladale co-investing a total £55 million of initial equity. Citigroup will invest an initial £11 million of equity and will underwrite a further £38.5 million of equity which will be sold down to both institutional and private investors. Halladale will invest £5.5 million of equity and will receive asset and property management fees as well as performance-related fees.
CReAM announces its first acquisition for £16.25 million. Totalling 80,000 sq ft, the Angel Place Shopping Centre in Bridgwater, Somerset is the town´s retail centre consisting of ground floor shopping space. Its retail tenants include Iceland, Superdrug, Wilkinsons, Adams and Bon Marche. The price reflects a net initial yield of 6.5 per cent. Halladale will utilise its entrepreneurial and active asset management skills to undertake to enhance the centre value.
CReAM will operate for a minimum of six and a maximum of eight years, and will seek to deliver core returns to external investors. It will primarily invest in UK retail property, a sector that has shown consistent outperformance as a property asset class, and will also have the ability to invest in other sectors where opportunities are identified.
Halladale was granted Approved Operator Status by Citigroup in 1999 - one of only a select number of UK property companies - and has to date undertaken four co-investment projects with values in excess of £100 million with Citigroup.
David Lockhart, Chief Executive of Halladale commented:
'Citigroup´s choice of Halladale as a founding co-investment partner and asset manager for a fund of CReAM´s size is a natural extension of our close professional relationship and a strong endorsement of the successful co-investment track record achieved over the past five years. This is the largest fund that Halladale has been involved in to date, providing very exciting opportunities, including Angel Place, to apply our diverse asset management skills where we can create significantly enhanced value.'
Michael Walton, European Managing Director of Citigroup Property Investors said:
'We are delighted to have closed this significant retail investment programme with such eminent partners as Halladale. Citigroup has made a £49.5 million commitment to this initiative and looks forward to introducing further institutional and private investors to co-invest with us. We look forward to a successful implementation of this exciting strategy which forms part of a major expansion of our activities in Europe.'