M&G acquires Fort Kinnaird stake in pivotal £167m deal

● Transaction marks latest in Scotland for firm, stressing its faith in prime retail

Property investment firm M&G Real Estate has carried out one of the largest retail investments this year by buying a 50 per cent stake in Fort Kinnaird retail park on the outskirts of Edinburgh.

The £167.25 million acquisition from the Crown Estate comes just days after the property firm unveiled its purchase of The Haymarket development in the city in a £49.1m deal. It comes as it eyes Edinburgh’s potential, saying corporate and visitor spend is set to remain a “significant part of the city’s economy”.

The latest deal, investing into the £334.5m asset, has created a new joint venture with Hercules Unit Trust (HUT). British Land owns 78 per cent of HUT and is the property advisor of the 560,000 square-foot site.

Fort Kinnaird has a catchment of more than 800,000 people and an estimated annual footfall of 14 million. It is anchored by M&S, Primark, Next and Odeon cinema, and has recently secured more than 85,000 sq ft of store openings and lettings including JD Sports, Office, Swarovski, Skechers, Pure Gym and Wagamama.

John Duxbury, head of retail at M&G Real Estate, said: “Our partnership at Fort Kinnaird underlines our commitment to prime retail, which continues to prove resilient to competition from e-commerce and reflects our strategy of investing in secure assets with long-term prospects for income and capital-appreciation. We are very pleased to partner with HUT and British Land, as we continue to align our investments with other experts in their field.”

Charles Maudsley, head of retail, leisure and residential at British Land also commented, stating: “Having secured such fantastic retail and leisure brands for the centre, Fort Kinnaird has an exciting future, and we’re delighted that M&G Real Estate will be joining us to further evolve the centre.”

Knight Frank represented M&G Real Estate, and CBRE and Griffiths Eccles represented the Crown Estate.

The deal is the latest of a series in Scotland by M&G Real Estate. It announced on Monday its acquisition of The Haymarket, covering four acres next to Haymarket station and earmarked for three Grade A office buildings, retail and leisure space, a 190-room hotel and a 172-room aparthotel.

M&G said the site, which has a total development value of about £280m, provides an opportunity to expand Edinburgh’s growing Exchange District financial quarter.

That followed a transaction to fund the construction of Quartermile 3 and Quartermile 4 and the announcement of plans to provide a £100m workplace at The Grid in Glasgow, saying the latter “aims to deliver a best-inclass workplace, rivalling new schemes in London and elsewhere in the UK”.

M&G Real Estate is the property fund management arm of M&G, which in turn is the investment division of Prudential in the UK, Europe and Asia.