AREA Property Partners has completed a deal to acquire a 40 percent stake in the Junction Fund for around £50 million (€56 million; $76 million).
The New York-based firm has subscribed to new shares in the UK property vehicle which has been in danger of breaching banking covenants.
The deal was originally announced on 30 April by listed Capital & Regional, which jointly manages the portfolio with Aviva Investors, the asset management arm of insurance company, Aviva.
In a statement today, AREA said the investment had been made on behalf of Apollo European Real Estate Fund III, and that Aviva Investors, a significant existing shareholder, has also invested a further £15 million. The units will be acquired by way of a secondary rights issue from existing investors that include Aviva Investors, Capital & Regional and Hermes.
A new company controlled by AREA but including representatives from Aviva Investors, Capital & Regional and Hermes will be formed to undertake strategic asset management of the portfolio, added AREA. Capital & Regional will continue as property managers, overseeing day to day management, leasing and development activity.
The new investment in The Junction will be used to both reduce the levels of current debt and as working capital for on-going portfolio improvements and marketing.
The portfolio comprises 11 retail warehouse parks located throughout the UK, including Bristol, Hull, Swansea, Telford and Thurrock. The properties are occupied by more than 50 separate tenants, including substantial occupation by B&Q, DSG, Comet and Homebase.
William Benjamin, managing partner of AREA , said the firm was investing in a sector that had been “over-sold” over the past year, but that was fundamentally “sound and sustainable” over the longer-term. “The properties are well located, well leased and diversified with good prospects for improvement through asset management,” he added.