B of I buys 50% stake in London retail park for private clients

Bank of Ireland Private Banking has acquired a 50 per cent interest in a shopping park in London for £78.8 million (€116 million) for its clients.

Gallions Reach Shopping Park at Beckton in East London is close to London City Airport and comprises 32 units plus two food units and 209,000 sq ft of shopping space. Tenants include well-known retailers such as Next, Boots, JD Sports, WH Smith and borders. The park has a catchment of about 800,000 people.

Pillar Property, which sold the stake to the bank, will continue to have an interest in the park through its shareholding in the Hercules Unit Trust, which owns the other 50 per cent of Gallions Reach, and through its ongoing role as asset manager of the park.

Hercules is the largest specialist owner of retail and shopping parks in the UK with a portfolio of £2.3 billion, comprising 5.5 million sq ft of retail space in 23 retail and shopping parks, including six of the top 20 shopping parks in the UK.

Announcing the acquisition yesterday, Bank of Ireland Private Banking director Mr Peter Collins said shopping parks have been the best performing sectors of the UK property market in recent years.

"This is a trend we believe is set to continue. Until now shopping parks have been the preserve of a small number of UK institutions and private clients have found it extremely difficult to buy quality assets in this area," he said.

This deal gives the bank's wealthy clients a 50 per cent stake in Gallions Reach and also makes them partners with Hercules which specialises in managing shopping parks. Mr Collins said Gallions Reach is the only shopping park within the M25 and has excellent long-term potential.

"We believe that this type of joint venture transaction, where private investors partner with active asset managers, is one of the ways investors can look to generate better long-term returns than are otherwise available from more standard property investment structures".

The deal could prompt others to put money into out of town retail parks and joint venture type structures in the UK market.