Modus to sell out of shopping centre venture with Ciref

Brendan Flood’s modus Properties is to withdraw from its UK shopping centre development joint venture with Ciref, the AIM-listed investor and developer, because it is ‘not in a position’ to provide capital.

Modus is set to sell its 50% stake in five developments owned by the joint venture: Trinity Walk in Wakefield; Friars Walk Centre in Newport, Wales; Delamere Place in Crewe; West Orchards in Coventry; and Birchwood in Warrington.

It is also likely to sell its 100% interests in two other large retail-led schemes, Regent Place in Swindon and Lindongate in Lincoln.

‘The developments still need investment,’ Flood told Property Week. ‘We are reviewing our options. We may consider the disposal of our equity interest in early 2009, if we can’t commit equity. However, we would still like to be involved as the development manager.’

Manchester-based Modus’s main lender is Bank of Scotland Corporate, which is working through its huge portfolio of equity and debt positions in the property sector, rather than making new loans.

‘We’re not in expansion mode, we’re in preservation mode,’ said Flood. ‘Development-wise we are having to rethink how we operate. We will go back to our roots as a development manager, developer-trader. That is how we operated seven or eight years ago. Since then we’ve taken more of an equity interest, but that model has gone.’

The only one of the developments that is under construction is Trinity Walk in Wakefield, which is due to open in spring 2010. Development funding for the 520,000 sq ft scheme, anchored by Debenhams and Sainsbury’s, is being provided by Anglo Irish Bank.

Friars Walk in Newport, which was expected to start this year, could start in the third quarter of next year, Flood said.

Delamere Place in Crewe could start in 2010, said Flood, adding that ‘we are reviewing all the costs’.

West Orchards in Coventry and Birchwood in Warrington are existing centres and redevelopments of both are on hold.

Ciref revealed this week, without identifying Modus, that ‘one of its joint venture development partners is in discussions with its bankers regarding its working capital facilities.

‘Depending on the outcome of these discussions, the joint venture partner may not be in a position to meet certain future capital commitments to the joint venture companies concerned.’

Modus still has a large investment property portfolio, worth more than £1bn. It includes a half-share with Ciref in the Houndshill centre in Blackpool, which opened in August.