Intu Properties and investment firm Cale Street Investment on Thursday announced the establishment of a 50:50 joint venture (JV) for the Intu Derby shopping centre, in the UK.
Intu Derby is located in the centre of Derby and is a retail and leisure destination in the East Midlands, with a yearly footfall of 22-million.
Cale Street will acquire, for cash, a 50% interest in the shopping centre for a consideration that values its share of the property at £186.3-million, before taking account of senior debt finance and customary working capital adjustments.
The consideration for the 50% interest is in line with the valuation as at December 31, 2018, of £372.5-million on a 100% basis, which represents a net initial yield of 6.6%.
The closing of the transaction will be subject to completing senior debt finance, the discussions for which are well advanced.
The transaction further advances Intu’s stated strategy of reducing its debt-to-assets ratio through disposals, part-disposals and introducing partners to assets. Following the JV financing process, Intu will use the net proceeds of the transaction to repay debt.
Intu CEO designate Matthew Roberts said that, in what is a challenging investment market, the “innovative transaction” shows that Intu is delivering on its strategy of reducing its loan-to-value (LTV) ratio through disposals and part-disposals.
On a pro-forma basis, Intu anticipates the impact of the transaction to reduce its LTV ratio by about 1%.
Intu will continue to manage the centre on behalf of the JV.