UK property company Liberty International's subsidiary, Capital & Counties, said on Thursday it was in a joint venture with London-based Great Portland Estates to own, manage and develop central London properties in a deal initially worth #460m.
The venture will see the formation of The Great Capital Partnership, will have a starting value of #460m and consist of more than 80000m? of property space.
This is the second major deal announced by Capital & Counties this week, as it has also acquired the retail part of the Royal Opera House block in London?s Covent Garden for #126,5m to give it "full control" of the retail frontages to the market area.
Capital & Counties owns more than 30 properties in the popular Covent Garden retail precinct.
Capital & Counties executive director Gary Marcuccilli said on Thursday that the rationale for the deal with Great Portland Estates was that it was a specialist central London property company.
"The rationale for doing the deal from our side is to tap into their asset management and development skills," he said.
Liberty International, which has a significant South African shareholding, has a joint listing on the London Stock Exchange (LSE) and JSE.
Its market capitalisation is more than #4bn.
Great Portland Estates, which is listed on the LSE, has a market capitalisation of about #1,1bn.
Marcuccilli said Capital & Counties and Great Portland Estates were looking to work together to grow the #460m property portfolio by acquiring new opportunities, in both the development and investment arenas.
Capital & Counties will bring properties worth about #299m to The Great Capital Partnership.
"It's virtually all our central London properties outside Covent Garden," said Marcuccilli.
He said Great Portland Estates was bringing properties worth about #162m to the joint venture.
Great Portland Estates would also pay Capital & Counties #68m in cash, "so that we end up with a 50-50 jointly owned vehicle", Marcuccilli said.
He said it was a relatively small joint venture in terms of the size of Liberty International.
"We hope it's a mechanism to growing our presence in central London," Marcuccilli said.
Capital & Counties MD Ian Hawksworth said the venture would enable the company to "increase our involvement in London".
It was "complimentary to our significant and expanding wholly owned activities in Covent Garden", Hawksworth said.
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