A Kuwaiti-backed investment firm has completed a deal to buy half of a major shopping centre in Derby.
Back in April, Intu Properties announced it had agreed a deal with Cale Street, an investment firm backed by the Kuwait Investment Office, to sell a 50% interest in the Intu Derby shopping centre.
Now, Intu has announced that the deal, which values Cale Street’s share at £186.3 million, has been completed.
As a result of the deal, Cale Street and Intu Properties have entered into joint ownership of the centre, which spans 1.3 million sq ft and comprises more than 200 units.
According to Intu, the closing of the transaction was subject to completing a senior debt financing of the centre and certain other completion conditions. These conditions have now been met.
Intu said that the net proceeds of the deal would be used to pay off some of its debts.
The Intu Derby centre attracts around 22 million people a year and last year generated a net rental income of £25.2 million.
It first opened in 2007 and was originally operated by Westfield until Intu Properties bought it in 2014.
Today, the centre is home to key retailers, including M&S, Debenhams, Next and Sainsbury’s.
Following the deal with Cale Street, Intu will continue to manage the centre on behalf of the joint venture.
Matthew Roberts, chief executive of Intu, said: “We are pleased to complete this innovative joint venture transaction in what is a challenging investment market in the Ƶ.
“Cale Street’s equity represents a flexible and cheaper source of capital than Intu’s own equity and other private equity financing sources considering investing in Ƶ shopping centres today. This reduced cost is achieved in exchange for a priority of distributions to Cale Street.
“While the transaction is earnings dilutive, the part-disposal of Intu Derby is evidence of our strategy to reduce debt through disposals and part-disposals.”
The future ownership of the Intu Derby centre, along with others in the portfolio of Intu Properties, had been in the balance for some time.
In November, a proposed £2.9 billion takeover of Intu Properties and its Ƶ centres fell through.
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It had been in talks with a consortium made up of infrastructure, transport and real estate giant Peel Group, Brookfield Property Group and Saudi Arabia’s Olayan Group.
But the consortium pulled out of the deal because of “uncertainty around current macro-economic conditions”.
It came after shopping centre operator Hammerson aborted its attempts to buy Intu Properties. It called off a £3.4 billion deal because of the state of the Ƶ retail scene.
