news release (Sweden)

Scottish Widows Investment Partnership adds €19.3 million property to its European real estate portfolio with the purchase of Coimbra Retail Park

Scottish Widows Investment Partnership (SWIP), the asset management arm of Lloyds TSB, has purchased the Coimbra Retail Park in Portugal for €19.3 million. This is a significant purchase for SWIP, following in-depth research of the European real estate market. The property was purchased on behalf of a European real estate portfolio which already contains three properties in France. The retail park has a net initial yield of 6.65%, expected to rise to over 8.00% in 3 years*. SWIP is marketing its European property investment capability to institutional clients in Europe. SWIP has purchased, Coimbra Retail Park from Sonae Sierra and Miller Developments, which jointly developed the building into a 12,750m2 retail park with 560 car parking spaces. It has a total of 14 shops, currently let to prestigious brands such as Worten, SportZone, Vobis, Mestre Maco, San Luís, Multiópticas and Loja do Gato Preto, as well as two restaurants. Coimbra opened in November 2003 and in 2004 recorded sales of over € 3.4 million. Mike Channing, Deputy Head of Real Estate Investment at SWIP, comments: “The Coimbra Retail Park is a significant purchase for SWIP’s European property portfolio. With the retail park now almost 100% let, our intention will be to add to the tenant mix over the coming years as the occupier market for retail park space in Southern Europe matures. Retail sales are expected to grow at 3% per annum in Portugal over the next five years, therefore this property is an excellent addition to our European real estate portfolio.” SWIP has completed detailed research on the retail sector across Europe and forecast average shopping centre returns in Portugal of 9% pa to 2009**. The best retail growth is forecast in Scandinavia and Southern Europe including, Sweden, Denmark, Finland, Greece, Portugal, Spain and France, as consumer spending increases in these countries. Coimbra Retail Park is a key development in SWIP’s cross border real estate investment strategy. Channing continues: “Fund managers who have commercial property investment expertise, like SWIP, are making strategic decisions on a continental-European basis, using their own research and partners to provide local knowledge. This trend will open up new areas of Europe for Swedish investors, offering greater diversification within pension fund assets. Coupled with the fact that commercial property has very low correlation to other asset classes, this type of investment offers a unique opportunity.” The management of Coimbra Retail Park will remain the responsibility of Sonae Sierra. Jones Lang LaSalle pan European capital markets team provides research, investment strategy advice, acquisition and property management services throughout Continental Europe for SWIP. * Source SWIP ** SWIP’s forecast total returns from 2005 to 2009