The UK's largest specialist retail property unit trust, the Hercules Unit Trust ('HUT' the 'Trust'), and The Crown Estate have formed a £680-million (approx. €940 mln) joint venture limited partnership. The 50:50 joint venture incorporates three properties HUT's' 550,000-ft² Fort Kinnaird Shopping Park in Edinburgh and The Crown Estate's Gallagher Retail Park, Cheltenham and The Shires Retail Park, Leamington Spa at 246, 000 ft² and 140,000 ft² respectively.
British Land, property advisor to HUT as well as being a 36.6% holder in the trust, will also act as property adviser to the new limited partnership.
The off-market transaction gives The Crown Estate a significant interest in one of the UK's premier out-of-town retail locations and to HUT's' specialist management team. HUT's unitholders gain exposure to two new retail parks that, together with Fort Kinnaird, offer a number of exciting asset management opportunities. HUT is currently in the final stages of completing a major redevelopment programme at Fort Kinnaird which will include a new 60,000 ft² Marks & Spencer store.
Andrew Jones, Director, British Land, property adviser to HUT, said: "This transaction will enable the Trust to redeploy capital into new schemes where British Land's expertise can greatly enhance value through tenant focussed programs of reconfigurations and park improvements. This is another example of HUT partnering with existing owners in order to gain exposure to high quality assets which rarely become available in the open market. We are excited at the prospect of working with The Crown Estate to derive maximum value from these high quality assets.
"It is an excellent deal for the Trust, enabling it to benefit from any future upside through its ongoing exposure to the £480 million Fort Kinnaird whilst providing further diversification for its investors by gaining access to two further parks."
Giles Clarke, Director of Investment at The Crown Estate, said: "This transaction is of tremendous significance to us. It is possibly the best example to date of how The Crown Estate has adapted and extended its reach in the last couple of years as part of a plan to diversify our portfolio and balance our exposure to the central London property market. It is our first investment-based joint venture and we are extremely pleased to be working with British Land and Schroders who have a proven track record at the forefront of retail warehousing in the UK.
"We are making a cash investment into the partnership of almost £45 million and investing in one of the very best shopping parks in the UK, while also increasing our holdings in Scotland, which remains an important area of activity for us."
CBRE acted on behalf of both HUT and The Crown Estate. Legal advice was provided by Dechert LLP.
Source: British Land