Catalyst Capital and Blackstone Announce Second Joint UK Purchase

8th Dec 2011

8th December 2011 - Blackstone (NYSE: BX) and Catalyst Capital LLP have today announced completion of the 50/50 joint venture purchase of the Houndshill Shopping Centre in Blackpool from Modus Corovest (Blackpool) Ltd in administration for £85m, reflecting a net yield of 7.4%, on behalf of their respective managed funds. The purchase has been financed with a senior loan facility of £55.25 million from pbb Deutsche Pfandbriefbank.

The 300,000 sqft Blackpool scheme was sold by KPMG, administrator to Modus Corovest (Blackpool) Limited, the vehicle set up by Manchester-based retail developer Modus to redevelop Houndshill.

Houndshill is Blackpool’s principal shopping centre with its profile significantly raised following a substantial £40 million extension and refurbishment programme undertaken and completed in 2008. The centre is anchored by strong high-street brands including Debenhams, Primark, H&M and Next.

Catalyst and Blackstone also jointly own the 320,000 sqft Stratford Centre along with 44 Broadway and Morgan House development site in East London. Both the Stratford Centre and the Houndshill Shopping Centre purchases are in-line with Catalyst’s and Blackstone’s joint strategy to create a UK shopping centre platform.

Ilan Goldman from Catalyst Capital, said: “This acquisition represents a solid retail purchase made in an extremely difficult investment market and we are looking forward to putting our plans for the Houndshill shopping centre into motion.”

James Lock, from Blackstone’s Real Estate team, noted: “Blackpool is the most popular seaside resort in the UK and is currently undergoing a regeneration, with significant investment in the beachfront promenade, the Winter Gardens and the Blackpool Tower, which has already had a positive effect on visitor numbers to the town. The scheme is ideally placed to benefit from this and to satisfy the latent retailer demand for the town. Blackstone is already an investor in Blackpool through our investment in Hilton hotels and Merlin Entertainments, the manager of the Blackpool Tower, so this is a natural fit for us.”

Harin Thaker, Head of Real Estate Finance International at pbb Deutsche Pfandbriefbank said: “We are delighted to be providing core senior debt financing in line with our business strategy to this joint venture between Catalyst Capital and Blackstone. The transaction demonstrates our continued presence in the market.”

Mark Firmin, joint administrator and KPMG’s Northern Head of Restructuring said: “Following a rigorous marketing process, we have identified appropriate buyers for Houndshill.

“As Blackstone and Catalyst Capital LLP currently own a number of shopping centres and have significant experience in the market, they are in a strong position to help Houndshill capitalise on the growing number of visitors to the recently regenerated area.”

Savills, Centros and Eversheds advised KPMG. Lunson Mitchenall and Clifford Chance acted for the JV.

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