Doughty Hanson completes UK shopping centre buy

European private equity firm Doughty Hanson has completed its eleventh purchase for its €590 million ($801 million) Doughty Hanson & Co European Real Estate II fund.

Doughty Hanson, the UK private equity firm, has paid the Salisbury Partnership, a joint venture between clients of PRUPIM and Rockspring, £60 million (€65 million; $89 million) for the Old George Mall shopping centre in the south west city of Salisbury.

Doughty has bought the asset for its second fund, Doughty Hanson & Co European Real Estate II.

The company, with offices in the UK, France, Germany, Italy, Luxembourg, Spain and Sweden, closed the Doughty Hanson & Co European Fund II in 2006 after raising €590 million of equity. The company said in a statement it had committed to twelve properties for the fund which are now worth more than €1.1 billion.

In its first European fund, Doughty Hanson sold out of 18 from a total of 21 investments made. The sales, which reflected 416 per cent of total invested capital, enabled its investors to receive a gross internal rate of return of 43 per cent.

The 137,000 Old George Mall shopping centre comprises 57 retail units occupied by tenants including Bhs, WH Smith, Mothercare and New Look and has Marks & Spencer as its anchor. The property joins other UK investments such as business parks Blythe Valley Park in the Midlands, Kings Hill Business Park in the south and Howick Place, a 220,000 square foot mixed-use development in Victoria, London.

Kevin Grundy, principal at Doughty Hanson, said: “This is an attractive opportunity consistent with our strategy of focusing on assets with significant value creation potential and defensive characteristics.” 

Doughty Hanson had previously planned to launch a core-plus fund last year to run alongside its opportunity vehicles and appointed Martin Brendel, the former head of acquisitions at DEGI, to head the vehicle. However,  the firm opted not to proceed after investment market conditions deteriorated. As as result, Brendel has since left Doughty Hanson.