Tristan teams up with Ellandi

Posted by Proeprty Week on 23rd Sep 2011

Investment management firms Tristan Capital Partners and Ellandi have formed a £150m joint venture to invest in secondary shopping centres. Over the next 12 months Tristan will invest up to £75m of equity from its Curzon Capital Partners 3 fund into the venture, which will then be geared at 50%-60%.

The joint venture will focus on distressed bank-led sales of local, value and convenience-led malls across the UK. This week, the pair exchanged contracts to buy Newlands Shopping Centre in Kettering from UBS Wealth Management.

Property Week revealed Ellandi was in talks to buy the scheme for more than £30m, reflecting a yield of around 8.25%, in April. The 200,000 sq ft mall is anchored by a 40,000 sq ft TJ Hughes, which the duo are in talks to relet to a national retailer after the chain fell into administration in June.

UBS bought the centre from Boultbee for £55.5m in 2005, reflecting a 5.6% yield. The scheme has “medium-term” potential for an extension of around 80,000 sq ft across the ground and first floors.

Tristan and Ellandi aim to bring up to five assets by the end of 2012 and, depending on the market, would consider extending the venture to £300m, with gearing. The pair hope to build a portfolio that could then be sold or eventually floated.

Mark Robinson, partner at Ellandi, said: “Over the next 12 to 18 months we both feel there will be many more opportunities to acquire solid, income-generating assets with the potential to add value through asset management. Given both of our track records, we hope to be at the forefront of bank-led sales.”

Robinson, former managing director of Oracle Estates, set up Ellandi in 2008 with Deutsche UK real estate head Morgan Garfield. Cameron Spry, head of investments at Tristan, said:

“These schemes are more defensive within the retail market and the pricing looks interesting on a historical basis, while they are easier to finance and will generate good investor returns.

“There are a lot of opportunities and the banks are sitting on a lot of schemes that need active management and capital expenditure. I imagine the banks will start moving them off their sheets soon and that suits our capital and Ellandi’s asset management.

“We will be well positioned to catch our share of the opportunities when they do come.” Earlier this month Tristan, AEW Europe and Addington Capital pulled out of talks to buy two shopping centres in Birkenhead for around £80m.

Jones Lang LaSalle advised UBS in Kettering.

Source: Property Week

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