Sale of intu Bromley
intu properties plc has exchanged contracts to sell its 63.525 per cent stake in intu Bromley to Alaska Permanent Fund Corporation (‘APFC’) for GBP177.9 million, representing a premium to its 30 June 2016 valuation of GBP175.9 million. The topped-up net initial yield based on market value at 30 June 2016 was 5.7 per cent.
intu Bromley is located in London’s largest borough and has an annual footfall of 20 million. intu has repositioned the asset having undertaken a successful mall refurbishment programme which improved the tenant mix of the centre and most recently with the fully let Queen’s Garden restaurant terrace.
As part of the transaction, APFC have also acquired Aviva’s 21.475 per cent interest in the centre. London Borough of Bromley is retaining its 15 per cent interest and freehold. The centre will be managed by LaSalle Investment Management on behalf of APFC. Completion is expected before the end of the year.
The transaction is in line with intu’s stated strategy of recycling capital into its GBP600 million UK development pipeline. intu will repay from the proceeds the current bank debt secured on the asset of GBP95.8 million.
David Fischel, Chief Executive, commented: “We are pleased to have successfully concluded this transaction which enables us to recycle capital into our UK development programme focused on our super-regional assets and, at a consideration above our June 2016 market value, demonstrates the continuing investment demand for prime UK shopping centres.”
New convertible bond
At the same time intu has announced the launch of an offering of GBP350 million of Guaranteed Convertible Bonds due 2022, with an increase option of up to GBP50 million.
The Company intends to use the net proceeds of the offering to:
- complete the committed pipeline of developments of GBP212 million over the next two years which are predominantly pre-let, including GBP152 million relating to the 400,000 sq. ft. extension of intu Watford
- refinance the GBP101 million drawn on the revolving credit facility (the “RCF”) for the GBP410 million acquisition of the remaining 50 per cent of intu Merry Hill in June 2016 and finance the identified asset management initiatives of GBP85 million over the next two years to reposition the asset
- provide sufficient overall financial facilities to enable the Company to pursue further projects which may be committed in the next 12 months, such as the leisure extension at intu Lakeside, the redevelopments of intu Broadmarsh in Nottingham and Barton Square at intu Trafford Centre and the development of the intu Costa del Sol shopping resort
These are expected to be accretive to both earnings and net asset value per share after taking account of the offering. The expected stabilised initial yield on these projects will be in the range of 6 per cent and 10 per cent.
INTU : intu Bromley sale