Australian investment manager QIC has exited its stake in a UK shopping center to co-owner intu Properties for £410 million (€534; $602 million).
British-listed intu Properties said in a statement it has exchanged contracts to acquire the remaining 50 percent of Merry Hill shopping center located near Birmingham.
The Merry Hill estate comprises the main shopping center and two retail parks that are spread over 1.7 million square feet, as well assome office and leisure space, and development land. The deal reflects an income yield of 5.2 percent, based on the net rental income of £43 million. intu would fund the purchase from its existing capacity and debt. It said in the statement that it has arranged a £500 million loan to replace a £191 million loan facility.
“We are pleased to have been able to acquire the remaining 50 per cent interest in intu Merry Hill, some two years after our original 50 percent acquisition in 2014,” said David Fischel, chief executive of the firm.
According to news reports, the sale, once completed, will mark QIC's exit from Britain's property market. The Brisbane-headquartered investment manager had acquired the interest in the property reportedly for £514 million in early 2007, and had indicated divestment plans in June 2015.
The sale comes just days before the UK votes on whether or not it will remain a member of the European Union.However, according to news reports said the decision to leave the UK had nothing to do with uncertainties surrounding a possible 'Brexit'.
Yet, QIC director, research and strategy, Katrina King, wrote in an article on the firm's website last Friday that referendum would “stir considerable volatility no matter the outcome”.
“We view the potential risk of a Brexit as significant, and something that cannot be ignored,” King wrote.
Outside of Europe QIC has been aggressively ramping up exposure in the US real estate market.
In May, PERE broke news of QIC's imminent plans of launching its debut US property vehicle. The firm is understood to have already started marketing the vehicle, QIC US Shopping Center Fund, to its existing investors and plans to raise $750 million to $1 billion over two closes. The vehicle will be open-ended in nature and the corpus is to be invested in retail assets. QIC's 12-property shopping center portfolio, totaling 12 million square feet, located primarily in New York, Washington DC and California, will be seeded into the fund.
Earlier this year, the firm also extended its existing joint venture relationship with the Forest City Realty Trust with the acquisition of a 51 percent stake in a retail shopping center located in New York. At the time of the deal announcement, Steven Leigh, managing director of QIC Global Real Estate, said this investment cements the firm's position as a key player in the US retail property market.
“We view the US retail market as being very attractive, and our existing portfolio is achieving good income growth off the back of robust retail sales, coupled with a sustained low interest rate environment…We see further opportunities in the US, and our active management approach means we are constantly monitoring opportunities in the market,” he said in the statement.