Nick Wilson

Property Correspondent

UK-based Liberty International, which has a significant South African shareholding, has bought 50% of British life assurer Prudential’s interests in two shopping centres for £653m.

The cash deal, which has been welcomed by analysts, sees Liberty International buying 50% of Prudential’s interests in The Mall at Cribbs Causeway in Bristol and the Manchester Arndale Shopping Centre.

The deal was concluded between Prudential’s wholly owned subsidiaries Prudential and Prudential Property Investment Managers (PruPIM) and Liberty International’s wholly owned subsidiary Capital Shopping Centres.

Liberty International will acquire a 33% share of the rents from The Mall at Cribbs Causeway, which is held under a 500-year leasehold interest, and 47,5% of the rents from Manchester Arndale, which is under a 200-year leasehold interest from the Manchester city council.

The deal also gives Liberty International interests in associated properties, which include the Retail Park at Cribbs Causeway in Bristol, as well as the retail component of mixed-used property New Cathedral Street in Manchester.

Speaking from London yesterday, Liberty International CE David Fischel said the two shopping centres had been ranked among the top 25 shopping centres by Churston Heard and TW Research Associates.

He said the deal helped Prudential and PruPIM to meet their objective of achieving greater diversification in their real estate holdings and was in line with Liberty International’s "strategic objective" of investing in prime UK regional shopping centres.

Fischel said the company used a combination of cash and its banking facilities to finance the acquisition. "At the end of last year we had £430m in cash in the balance sheet. We used this and some additional banking facilities to make the purchase," he said.

Fischel said The Mall was fully let, while Manchester Arndale consisted of a completed portion that was almost fully let, as well as a portion being developed.

Colin Young, fund manager of Old Mutual’s South African-listed property funds, said although Liberty International paid "quite an expensive price"

the acquisition was "fantastic" because it further diversified the company’s property portfolio in different cities in the UK.

"They were sitting on a lot of cash and it’s a more effective use of cash,"  said Young