David Pearl’s Structadene is to buy the controversial Islington Portfolio in north London for more than £65m.
Pearl is the preferred bidder for the portfolio, which comprises more 222 council-owned commercial units. The vast majority of them are let to small retailers across the borough, which has sparked outrage about the future of independent traders.
The portfolio generates a rent of £2,427,000 a year and 55% of the income is subject to historic or outstanding rent reviews. Islington says the total estimated rental value of the portfolio is more than £3.73m.
The council’s marketing brochure says there are sites with alternative use potential and ‘marriage value’ to unlock residential units let under commercial leases.
Local independent traders were outraged at the council’s decision to sell the properties. They fear they will be stung with huge rent reviews under a new landlord and be forced out to be replaced by chain stores.
In a bid to placate the angry occupiers, Islington Council made bidders price each property individually. Occupiers can buy the freehold of their property if their bid matches Pearl’s.
Islington Council said recently that many tenants had already expressed an interest in buying their premises before the decision to sell was made.
But traders are now arguing they have been asked to raise vast sums of money to buy their properties, far in excess of what they are worth.
The properties are located in some of the borough’s most famous street, including Upper Street, Essex Road and Amwell Street. Mainstream occupiers include Slug & Lettuce, Nandos, Starbucks and 15 estate agents.
Raymond Mold and Patrick Vaughan’s London & Stamford Investments were among the underbidders.
Erinaceous is advising Islington Council.
In March, Pearl bought British Land's Soho portfolio for more than £26m, reflecting a 3.7% yield.
The 37,500 sq ft portfolio comprises eight freehold properties on Dean Street, Newman Street, Wardour Street, Oxford Street, Poland Street and Great Marlborough Street.