intu properties and Cale Street Investments have established a 50/50 joint venture for the intu Derby shopping centre. The deal entails the acquisition of 50% interest in the property by Cale Street for €215.4m (£186.3m). The consideration is in line with the valuation at 31 December 2018 of €430.7m (£372.5m) (100%), which represents a net initial yield of 6.6%. The net rental income of the property was €29.1m (£25.2m) for the year ended 31 December 2018.
intu Derby is located in the centre of Derby and is a key retail and leisure destination in the East Midlands, with an annual footfall of 22 million. The 1.3 million ft² centre was extended and redeveloped in 2007 and provides over 200 units and includes key retailers such as M&S, Debenhams, Next, H&M, Sainsbury’s, Zara, Hollywood Bowl and Showcase Cinema de Lux.
intu will continue to manage the centre on behalf of the joint venture. The transaction further advances intu’s stated strategy of reducing its debt to assets ratio through disposals, part-disposals and introducing partners to assets. Following the joint venture financing process, intu will use the net proceeds of the transaction to repay debt.
Matthew Roberts, Chief Executive Designate, commented: “We are pleased to announce our new partnership with Cale Street and look forward to working with them at intu Derby. In what is a challenging investment market, this innovative transaction, which is in line with the December 2018 valuation, shows intu is delivering on its strategy of reducing loan to value through disposals and part-disposals. On a pro-forma basis, we expect the impact of this transaction to reduce our loan to value by around 1%.”