Prime global investors, Kohlberg Kravis Roberts (Known as KKR) recently sold Gallagher Shopping Park, West Midlands for £175 million to Hana Financial Investments in a deal managed by Korea Asset Investment Management (KAIM).
Guillaume Cassou, Member and Head of European Real Estate at KKR, said “We backed a fundamentally good asset in need of repositioning and Quadrant implemented an intensive business plan over four years that has resulted in a great end product, which we have now sold to long-term income-focussed capital. We were delighted to transact with Hana and KAIM on their first foray into the UK market.”
Investing through its Real Estate Opportunity Fund, KKR purchased the retail park in 2014 in partnership with Quadrant Estates and had agreed to a three separate ownership contract which totalled a cost of £123 million.
Quadrant Estate meanwhile had put together a plan to reposition the scheme. The plan included the fusion of three car parks into a single large shopping park, modification of Curry’s and PC World, the division of 49,000 sq ft of unoccupied space as well as the creation of a new 33,000 sq ft including four new restaurants providing much-needed foods and beverages service.
These plans successfully led to around £17 million worth of investments in the retail park with an increase in the rent revenue to approximately £2 million per annum along with an exceptional jump in the visitors and customers.
All outlets in pre-let to retailers such as M&S, JD Sports, DFS, Nando’s & Costa at rents of around £45 per sq ft.
Christopher Daniel, Founding Partner at Quadrant Estates, commented: “We achieved exactly what we set out to do with the Park. We created an asset that is now ranked by CACI as one of the top 10 in the Country, has a WALT of greater than ten years and is one of the few investments in the country that has evident reversionary potential.”
This deal is thought to be the biggest in the UK retail warehouse and industrial market this year and is also seen as a landmark step for Korean investors eager to break into the of the UK retail market.
Sangmin Lee, CIO of KAIM, said “We are delighted to have acquired this asset, which offers our investors an attractive combination of secure income returns and longer-term upside potential. We are attracted to it by its inherent strength [as] evidenced by the retailers’ trading performance and location. We are looking forward to working with Quadrant as our local asset manager to secure the future performance of the park during our investment period.”
JLL and Wilkinson Williams represented KKR and Quadrant.
Montagu Evans advised Hana and KAIM.