These 3 Private Equity Firms Are Willing To Bet On UK Shopping Centres
One of the biggest news stories of last year was a private equity firm, Brookfield, pulling out of a deal to buy shopping centre owner Intu. But below the level of corporate M&A, private equity firms are starting to dip their toes in the shopping centre investment market.
Private equity firms, particularly from the U.S., are major holders of UK shopping centre assets, and so alongside UK REITs and institutions will be big sellers as loans become due and refinancing issues bite.
But a new wave of private equity firms is likely to be the buyer of these assets, looking for cheap pricing and betting they can buy at the bottom and improve the income from centres. Here are three players already active.
Cale Street Partners
Cale Street is not a pure private equity firm looking for distressed assets — it provides debt as well as buying assets direct. Two of its founders, Ed Siskind and Wilson Lee, come from Goldman Sachs and Lehman Brothers, respectively, with the former having been a global co-head of real estate at Goldman. It is in talks to take a 50% stake in Intu Derby from Intu. The centre was valued at £458M at the end of 2017. Cale Street’s previous deals include the provision of debt and preferred equity to fund the purchase of a €1.1B pan-European office portfolio by NorthStar Realty Europe, a deal where it stepped in to complete a deal when another lender pulled out. It is backed by the Kuwait Investment Authority.
Areli Real Estate
Areli is quite a change for Rob Tincknell. Previously the chief executive of the Battersea Power Station Development Co., he quit as head of an £8.5B scheme last year, and his new firm is reported to be buying the Nicholsons shopping centre in Maidenhead for £26M. The centre was one of the first to go into insolvency this cycle after lenders pulled the plug on previous owners Cheyne Capital and Vixcroft.
Praxis launched a new £250M value-add real estate fund in 2018, and is using it to buy up the kind of small, regional shopping centres that are distinctly out of favour. Last month it bought the Forum shopping centre in Sitingbourne for £7M and late last year it bought the Blaydon centre near Newcastle for £30M.