Aviva develops £1bn PSP jv
Canada’s Public Sector Pension Investment Board is under offer to buy a 50% stake in a £1bn portfolio of central London property owned by Aviva Investors’ Life Fund.
The innovative deal is designed to unlock a wealth of development opportunities in the portfolio.
The £500m capital injection from PSP will help fund developments such as the 350,000 sq ft Fountain House scheme at 130 Fenchurch Street, EC3, and the redevelopment of Irongate House at 22-30 Dukes Place, EC3, as well as a string of development opportunities in the West End.
[caption id="attachment_828403" align="alignright" width="250"] Fountain House, EC3[/caption]
Canada’s Public Sector Pension Investment Board is under offer to buy a 50% stake in a £1bn portfolio of central London property owned by Aviva Investors’ Life Fund.
The innovative deal is designed to unlock a wealth of development opportunities in the portfolio.
The £500m capital injection from PSP will help fund developments such as the 350,000 sq ft Fountain House scheme at 130 Fenchurch Street, EC3, and the redevelopment of Irongate House at 22-30 Dukes Place, EC3, as well as a string of development opportunities in the West End.
The portfolio also includes income-producing assets such as Nuffield House at 41-46 Piccadilly, W1, an office block opposite Fortnum & Mason.
The deal gives PSP instant access to the central London office market on a scale which would typically take years to establish.
It has adopted a similar approach elsewhere, agreeing sizeable joint ventures with established operators in several sectors, such as its €1bn (£730m) European logistics partnership with SEGRO, agreed in 2013.
However, the varied nature of the assets in the Aviva portfolio make it a trailblazing deal, particularly in the highly competitive London office market.
Other central London joint ventures, such as Canada Pension Plan Investment Board and Hermes’ £350m London jv, have typically focused on either value-add or core assets.
Aviva instructed CBRE to approach a handful of global investors with the opportunity earlier this summer as it sought to take advantage of the development potential of the portfolio.
In total, close to 1m sq ft of development could be brought forward over the next few years as a result of the deal.
It is possible that the jv will look to acquire additional assets in future, but its primary focus will be exploiting opportunities within the existing portfolio.
JLL is acting for PSP on the purchase, which is expected to exchange imminently.
All parties declined to comment.
jack.sidders@estatesgazette.com
