KKR, a leading global investment firm, announces the sale of its retail park at Junction 9 on the M6 to Korean investors, Hana Financial Investments in a real estate fund managed by Korea Asset Investment Management (KAIM), at a transaction price of £175m.
The park was acquired by KKR together with its specialist operating partner, Quadrant Estates, in 2014 by piecing together three separate ownerships at a cost of c.£123 million. KKR’s investment was made through its Real Estate Opportunity fund.
Recognising the inherent potential within the park, Quadrant developed and implemented a plan for a wholescale repositioning of the scheme. This included amalgamating the three distinct car parks to create one homogeneous shopping park, the consolidation and right-sizing of Curry’s and PC World, the sub-division of 49,000 sq ft of vacant space and the development of 33,000 sq ft of new space including four new restaurants creating a much-needed F&B offer. These works resulted in capital investment into the park of c.£17 million.
All the units were pre-let to retailers including M&S, JD Sports, Sofology, DFS, Nando’s, Costa and Smash Burger at rents of up to £45 psf. This resulted in an increased rent roll of c.£2 million per annum, together with a significant increase in customer numbers as well as frequency of visits.
The transaction is the largest single asset sale in the U.K. retail warehouse sector this year and the first time Korean investors have ever stepped into UK retail.
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.”
Christopher Daniel, Founding Partner at Quadrant Estates, said “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 10 years and is one of the few investments in the country that has evident reversionary potential.”
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 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. ”
KKR and Quadrant were represented by JLL and Wilkinson Williams. Hana and KAIM were advised by Montagu Evans.