MEPC lifts US assets

TOM STEVENSON

Deputy City Editor

MEPC, Britain's second-biggest property company, is putting its European property portfolio up for sale. Proceeds from the disposal of the assets, in the balance sheet at pounds 167m, have been earmarked for investment in Australia and the US, where the company is also spending pounds 186m on a retail property unit trust.

James Tuckey, chief executive, said: "Our European operations have performed well, but we believe there are better opportunities. We have some prime assets in continental Europe and, in due course, we expect to realise the full value."

The acquisition of the North American Property Unit Trust is for an initial pounds 84m and MEPC will assume associated borrowings of about pounds 102m. Its main assets are three enclosed shopping malls, an open-air shopping centre and three quarters of an office building freehold interest in New York.

MEPC already has retail investments in the US, having spent pounds 115m two years ago to double its presence in the US with the acquisition of two shopping malls in California's San Fernando valley and Atlanta, Georgia.

Most of the consideration for Naput comes in the form of MEPC shares, with a partial cash alternative worth up to pounds 32m.

Following completion of the deal 17 per cent of MEPC's assets will be in the US, and the retail portfolio will account for just over a third of the total.

The new shopping malls include a 1.4 million sq ft site in Jacksonville, Florida, and a slightly smaller mall in Bakersfield, California. . The freehold relates to the land beneath the 30-storey Graybar building next to Grand Central Station in New York City.

The decision to concentrate investment in the US chimes with a recent report from Jones Lang Wootton, the surveying firm, which believes the US market is rising fast, with vacancy rates down and rents and capital values increasing fast.