Henderson Global Investors extends UK shopping centre fund by seven years and loosk to raise £200m in new capital
Investors in property trust Henderson Global Investors have voted to extend its £650 million UK shopping centre fund by seven years.
Jersey-based Henderson, which is behind the proposed £850 million St James Quarter development in Edinburgh, is also looking to raise a further £200 million from new and existing investors.
Henderson said this additional £200 million of capital will be used to fund redevelopments, meet loan redemptions and buy more UK shopping centres.
Its UK shopping centre property unit trust was set up in July 2004 and was originally due to terminate in 2014.
Under the new deal with shareholders, the fund will now run until 2021 with a redemption window in 2017.
Henderson's UK shopping centre fund currently holds a 50 per cent stake in Buchanan Galleries in Glasgow, the Bullring shopping centre in Birmingham and Whitefriars shopping centre in Canterbury.
A proposed 400,000 sq. ft extension of Buchanan Galleries, in which Henderson is working alongside Land Securities, secured Tax Increment Financing to fund that development in April.
Henderson's UK shopping centre fund has 100 per cent ownership of the St James Centre in Edinburgh, which has been dogged by delays as a result of the financial crisis.
Henderson agreed a £70 million refinancing package in June 2011 with German bank BayernLB to pay off debts from the delayed St James Centre redevelopment.
Henderson said today its UK shopping centre fund has so far delivered a five per cent return to investors in the past year - rising to more than 13 per cent over three years – and its portfolio has a vacancy rate of less than two per cent.
Henderson fund manager Myles Whyte said: “The fund’s performance has been representative of the prime nature of the fund’s ownerships and we expect that strong performance to continue, supported by a solid income return.
“We are confident that the extension to the fund’s life presents us with an opportunity to further drive returns for existing investors, while also opening an opportunity for any new investors to enter the fund.
“We are confident that the right asset management initiatives are being employed across the portfolio in order to meet both consumer and retailer demand.
“Meanwhile, we are committed to delivering our development proposals at Buchanan Galleries in Glasgow, with our partners Land Securities, and at St James Quarter in Edinburgh, which have the ability to further significantly enhance returns throughout the remainder of the fund’s life.”
Henderson bought St James Centre from Donegal Place Investments for £184 million in 2006 and City of Edinburgh Council approved an £850 million redevelopment project in February 2009.
Property management firm Colliers CRE predicted in its 2009 Summer Review the project would not get off the ground until at least 2013 given the poor state of the commercial property market in Scotland.
Henderson has since confirmed the first stage demolition work was unlikely to get under way before late 2012 or into early 2013 with a view to completing the project by September, 2016.
John Lewis is the main anchor for the St James development, and Henderson says it is now working through a shortlist of hotel operators for the development.
In March 2011 Henderson announced the funding vehicle used to buy the 13-acre site - Henderson UK Shopping Centre Fund - is limited by statute in how much it can finance the development.
Henderson is understood to have since held discussions with other investors with a view to helping to fund the scheme but as yet has not attracted any partners.
Henderson's original plans for the St James Centre site was a £200 million, five-acre redevelopment to be complete by 2008.
This was later expanded to an £850 million project encompassing 13 acres to include hotels, homes and office space.
Henderson's outline plan for the redevelopment of the site includes doubling the retail space to more than one million sq. ft as well as two new hotels, 250 apartments, 160,000 sq. ft of office space and 1,800 underground parking spaces.