A FIFTY per cent stake in Edinburgh’s Fort Kinnaird retail and leisure park has been acquired for nearly £170 million by a property investment giant.
M&G Real Estate, which is the property fund management arm of M&G, bought the interest in the £334.5 million asset from the Crown Estate.
Its investment in the 560,000 sq ft property, whose anchor tenants are Marks & Spencer, Primark and Odeon, has led to the creation of a new joint venture with Hercules Unit Trust. British Land owns 78% of HUT and is the property adviser to the park, which sits on the outskirts of Edinburgh.
JD Sports, Office, Swarovski, Skechers, Pure Gym and Wagamama are among the latest names to move into Fort Kinnaird, between them accounting for more than 85,000 sq ft of lettings. The site has an estimated annual footfall of 14 million.
John Duxbury, head of retail at M&G Real Estate, said: “Our partnership at Fort Kinnaird underlines our commitment to prime retail, which continues to prove resilient to competition from e-commerce and reflects our strategy of investing in secure assets with long term prospects for income and capital appreciation.
“We are very pleased to partner with HUT and British Land, as we continue to align our investments with other experts in their field.”
While the Crown Estate, which manages the property interests for the Royal Family, is perhaps better known for its land and coastal interests, it is also a major investor in commercial property.
According to its website, the organisation has a portfolio spanning 4.3m square feet of commercial property outside London, across 13 retail and shopping parks, three shopping centres and one leisure venue.
Charles Maudsley, head of retail, leisure and residential at British Land, said: “We have thoroughly enjoyed partnering with The Crown Estate and together have made Fort Kinnaird a great place for people in Edinburgh to shop, be entertained, dine out and relax. Having secured such fantastic retail and leisure brands for the centre, Fort Kinnaird has an exciting future and we’re delighted that M&G Real Estate will be joining us to further evolve the centre.”
M&G Real Estate had more than £30 billion invested in real estate across a broad range of properties in Europe, North America and the Asia Pacific region at December 31. Its parent group M&G is the investment arm of Prudential in the UK, Europe and Asia.
Meanwhile, the total return from commercial property in Scotland dipped in the first quarter of the year compared with the last three months of 2017. Figures released by property firm CBRE suggest there was a 1.7% total return from property investment in the quarter, down from 2.1% in the final quarter of last year. However, the return was ahead of the first quarter of 2017, which was measured at 1.5%.
Within Scotland, the property firm reported that Aberdeen continues to underperform in comparison with other Scottish cities. However, it notes that returns have been improving in the Granite City, with the annual return for Aberdeen offices up 3.1% in the year to March 31, compared with 2% to the end of December.
The firm said performance was broadly unchanged in Glasgow and Edinburgh in the first quarter compared with the final three months of 2017, on an annual basis. It said the retail sector and offices produced returns of 7% in the year to the end of March in Glasgow, while in Edinburgh returns were up 7.6% for retail and 9.6% in offices. Returns from industrial property improved slightly in both cities, the firm found.
CBRE said property deals worth £654.5m were concluded in Scotland during the first quarter, up from £484m in the first quarter of 2017 but significantly less than the £1.11 billion spent in the last three months of last year. Major deals included the sale of Aberdeen International Business Park to LCN Capital PartnerS for £112.5m. The Skypark campus in Glasgow was acquired for £78m by Hermes and 3 Atlantic Quay, let to the Scottish Courts, was acquired by the LPI Income Property Fund for £50m.
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