Partner Article

Breaking news: SEGRO acquires Aviva Group's 50% APP share for £365m

Property investment firm SEGRO plc has acquired the remaining 50% of the Airport Property Partnership joint venture (APP) for £365m from the Aviva Group Entities.

Already owning half of the property joint venture, Segro was bolstered by £216m worth of funding and disposed of £149m worth of assets to the Aviva Group.

APP contains 21 direct property assets, valued at £1,097 million (in line with book value at 31 December 2016) and totalling 350,000 sq m, 87 per cent of which (by value) are located at London’s Heathrow Airport, including the majority of the airport’s airside cargo facilities.

SEGRO acquired its original stake in APP in June 2010, and was asset manager for the joint venture, with Aviva Investors acting as fund manager.

The portfolio also includes one development project underway, which is expected to complete in 2017. The portfolio had a vacancy rate (at 31 December 2016) of 7.5 per cent and an average lease length of 11 years to the earliest of break or expiry.

At 31 December 2016, the properties generated annualised passing rent of £42m with a further £6m payable after expiry of rent-free periods.

David Sleath, SEGRO’s Chief Executive Officer, said: “The strong working relationship between the teams at SEGRO and Aviva Investors has enabled the APP portfolio to deliver excellent performance over the last five years and we appreciate Aviva’s contribution to making APP such a successful partnership.

“We believe now is the right time to take full control and ownership over APP in which we see a number of opportunities to realise further value from its unique portfolio in the short and long term.

“We look forward to pursuing our development plans, taking advantage of strong occupier demand for facilities around Heathrow from customers needing rapid access both to the airport and to Central London.

“Our Heathrow portfolio is one of the jewels in our crown and we are delighted to be able to add scale in this supply-constrained market.”

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