Benchmark Group and Schroder Property Investment Management are establishing a new specialist property unit trust, The West End of London Property Unit Trust (WELPUT), pending regulatory approval.
Following the approval of Benchmark shareholders, WELPUT will acquire the majority interest as a limited partner in the WEL Property Limited Partnership.
The WEL Partnership will acquire from Benchmark for £249.5m the entire partnership interest in a Benchmark limited partnership which owns eight West End properties. The WEL Partnership will simultaneously acquire a property from the Schroder Exempt Property Unit Trust for £47.9m.
The WEL Partnership portfolio will total just under £300m of assets with 61% by value in prime locations in Mayfair and St. James', 18% in Soho, 14% in Covent Garden and 7% in Knightsbridge.
In addition to its 73% initial interest in the WEL Partnership portfolio, Benchmark will receive net cash proceeds of £161.1m. There will be four initial founding investors in WELPUT, including Benchmark and the Schroder Exempt Property Unit Trust.
Benchmark has been appointed property adviser to all of WELPUT's property interests. Schroder Property Managers (Jersey) will be the manager. WELPUT has a life of 10 years unless extended by agreement of unit holders.
Schroders and Benchmark aim to grow WELPUT's assets to at least £1bn within three years.
Nigel Kempner, chief executive of Benchmark, said of the disposal: “It will enable us to consolidate net asset value by converting substantial unrealised revaluation reserves into realised profit and will achieve a profit over current book value. Benchmark will earn property advisory fees and, as WELPUT grows, it will have the opportunity to increase this new stream of earnings without raising the capital base of the company.
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