The Crown Estate has bought a 50% stake in Land Securities’ 530,000 sq ft Princesshay shopping scheme in Exeter as part of a major move to diversify its property assets.
As first revealed by Property Week (news 03.07.09) it is buying a half share of the centre that opened in September 2007.
It has paid close to £100m for the stake reflecting a yield that is thought to be between 7.5% and 8%. The shopping centre was valued at £225m when it was completed. It is anchored by Debenhams and includes 60 retail units.
The deal was complicated as the freehold is owned by Exeter council and also comprised several leaseholds across the scheme. The Crown, advised by Griffiths Eccles, has invested in a 50% long leasehold alongside Land Securities.
The purchase was led by director of investment and asset management Paul Clark who has been diversifying its portfolio since he joined in 2007. His strategy is to sell ‘non-core’ central London assets, such as offices, and invest in larger regional schemes and its core London estate of Regent Street and St James’s.
Clark said: “We are not a balanced fund but we do want to distribute risk and return. We will continue to have a strong presence in London but only in our core areas.
“We have disposed on non core to reinvest in both the diversification fund and our marine business. We are investing in dominant retail schemes like Exeter and we also like London and southeast industrial and greater London residential. But we look through the short term market and look at the medium long term when we invest."
Richard Akers, managing director of retail for Land Securities said: “The sale was agreed in July as one of the last disposals in our retail sales programe. We will continue to manage the retailer relationships established in Exeter and will use our development expertise to lead any future development activity for the centre.”
Also this week it is thought the Crown has exchanged to buy Queensgate Centre retail park in Harlow in Essex from LaSalle Investment Management for more than £60m, reflecting a yield of 6.75%. Lewis & Partners is acting for LaSalle and Wilkinson Williams is advising the Crown.