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Shopping mall trades in all-UK insurer deal

The Fremlin Walk shopping center in Maidstone, UK, has changed hands in an all-UK insurance company deal valued at £110m.

M&G Real Estate, the real estate investment management arm of UK-based insurance company Prudential, has purchased the Fremlin Walk shopping mall from Legal & General Property, the equivalent at rival UK insurer Legal & General (L&G) in a deal valued at £110 million (€138.8 million; $173.6 million). The deal reflected a net initial yield of 6 percent.

The property was previously acquired by L&G in December 2010, as values and rents were starting to rebound following the global financial crisis. Indeed, according to an announcement from the firm, it improved rents from £90 a square foot to £120 a square foot during the course of its ownership. Subsequently, having acquired the asset for £91.6 million in a deal that reflected a yield of 7.61 percent, it was able to sell it for almost £20 million more less than four years later.

L&G held the asset within its UK Property Income Fund, a vehicle closed at the end of 2011 with £300 million of equity. The vehicle’s structure was somewhat unusual as it offered its investors with the flexibility to choose either geared or un-geared subscriptions.

Charlie Walker, the fund’s manager, said: “The UK PIF strategy is all about strength of income and net operating income growth, and Maidstone has delivered for us on both counts. Through creative active management we have moved rents onwards…delivering new fascias along with a strengthened footfall and scheme turnover. Maidstone’s shoppers are clearly happy, as too are our investors.