Rotch joins Dellal in £500m fund move

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Tchenguiz brothers kick-start spending with £50m shed buy

Rotch has joined forces with Guy Dellal, the son of legendary property investor 'Black Jack' Dellal, to set up a £500m commercial property fund.

To kick-off the new fund, Rotch's owners the Tchenguiz brothers and Dellal have bought a new Argos distribution centre at Burton-on-Trent, near Derby, for close to £50m. The purchase, from ProLogis and St Modwen, is at yield of below 6%, a record low for industrial and distribution property.

Topland and London & Regional were also vying for the 52,400 sq m (564,000 sq ft) shed, which is due for completion in May 2003.

The new fund has also bought a Holiday Inn hotel in Cardiff from British Land for £7m, and is close to a deal to buy £40m-worth of petrol stations.

While Guy Dellal is seen in the tabloids for his rumoured romance with model and actress Jerry Hall more often than in he is in the property press, he is no novice at property investment, and is a director of his father's company Allied Commercial Holdings.

However, Dellal's investment in the fund will be on behalf of a family trust rather than Allied Commercial.

The move is also an unusual one for Rotch, which rarely sets up joint ventures. However, Robert Tchenguiz said he was a good friend of Dellal, and the new fund would seek the same type of property that Rotch usually invested in, let to strong covenants on long leases.

Tchenguiz added that the new fund was proof that Rotch was not attempting to sell its portfolio, as has been widely rumoured in recent weeks.

'There's a whole host of rumours that we're selling,' he said. 'But while we are selling a few £5m or £10m buildings, I want to buy more of the bigger lot sizes.'

The speculation has particularly focused on Rotch's City trophy buildings – Woolgate Exchange, EC2, Premier Place, EC3, and 60 Gracechurch Street, EC3. Many City observers are convinced these buildings, bought for £530m, are quietly available.

However, Tchenguiz said the quiet investment market meant it would not be a good time to sell. 'We're a market leader on the buying side, not on the selling side,' he said. 'If tomorrow a building sold for 5.5%, we might think about it, because we bought Woolgate for 6.2%. But there's no evidence in the market to show we could do that.'


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