intu properties and LaSalle Investment Management (acting on behalf of Greater Manchester Pension Fund and West Yorkshire Pension Fund) are forming a partnership to jointly own intu Chapelfield shopping centre in Norwich.
LaSalle will acquire a 50 per cent interest in the property for net consideration of £148 million, before working capital adjustments, which represents a net initial yield of 5.0%. The consideration for the 50 per cent interest is in line with the valuation at 31 December 2016 of £296 million (100 per cent) and a small discount to the valuation at 30 June 2017 of £305 million (100 per cent). The net rental income of the property was £15.5 million for the year ended 31 December 2016.
intu Chapelfield is located in the centre of Norwich and a key retail destination in East Anglia, with an annual footfall of 12 million. The centre provides 90 units and includes key retailers such as House of Fraser, Apple, Zara, River Island, H&M and Boots. intu will continue to manage the centre on behalf of the joint venture. The closing of the transaction is subject to EU merger clearance.
The transaction further advances intu’s stated strategy of introducing investment partners to its assets and recycling capital into its UK development pipeline. intu will use the net proceeds of the transaction to repay debt on its revolving credit facility and to invest into its committed development pipeline.
David Fischel, intu Chief Executive, commented:
“We look forward to working with LaSalle Investment Management on intu Chapelfield which, since its opening in 2005, has firmly established itself as the prime retail destination in East Anglia.”
Tom Rose, Fund Manager at LaSalle, said:
“I am delighted with this investment that we have made on behalf of the Greater Manchester and West Yorkshire Pension Funds, and also to be partnering with intu. This is an acquisition that we believe will provide long-term value. It is a quality asset in an affluent catchment area, well-aligned with our strategy for UK investments“.
Councillor Kieran Quinn, Leader of Tameside Council and Chair of GMPF (Greater Manchester Pension Fund), added:
“This is an excellent addition to our portfolio. Greater Manchester Pension Fund, which is the largest Local Government pension fund in the country and managed by Tameside Council, is committed to achieving sustainable long-term investment returns for our members’ pension requirements. I am confident that the partnership between LaSalle and intu will prove successful in its management of this asset.”