Forth Ports to sell flagship retail centre

FORTH Ports has hoisted the "for sale" sign over Edinburgh's Ocean Terminal as the recently acquired group focuses on investing tens of millions of pounds in the "re-industrialisation" of its assets on the capital's waterfront.

• Charles Hammond

The group is seeking 100 million for the flagship shopping centre which comes with about 10 acres of adjacent development land.

The Waterfront Plaza to the east of Ocean Terminal has planning consent for a mixed-use "urban village" development including a hotel and other business and leisure facilities.

It is expected that the eventual buyer, likely to be a retail fund, will have to refinance Ocean Terminal's 68m of debt. The centre, which opened in 2001, was formerly a joint venture between Forth Ports and HBOS. In 2009, the bank's new owners, Lloyds Banking Group, sold its 50 per cent equity in the development back to the ports company for a minor cash consideration of 2m but lumbered it with the debt facility which extends to 2015.

Forth Ports chief executive, Charles Hammond, strenuously denied that Lloyds was adding pressure to the group to sell in order to recoup its investment.

Arcus, the infrastructure fund which bought Forth Ports for 746m last month, intends to reinvest the proceeds of the Ocean Terminal sale in developing renewable energy projects and other industrial facilities at its ports, including Leith.

Forth Ports is proposing to build a 600m biomass plant on the Edinburgh waterfront in conjunction with Scottish and Southern Energy.

The project, which is expected to have a 100-metre tall chimney stack, is currently the subject of furious local opposition.

Hammond said the firm would this year "spend more time with the council and the local community trying to resolve concerns" although he would not disclose if the group intended to change its plans.

The 100m price tag on Ocean Terminal is expected to reflect a net initial yield of about 7 per cent.

Simon Gray, founder of Arcus Infrastructure Partners, said: "As an infrastructure fund, we acquired Forth Ports because we identified significant potential to develop the ports business both in Scotland and in England, and we see exciting opportunities to do so, particularly in supporting the renewables sector.

"Real estate and retail are specialised areas and we believe that the further development of Ocean Terminal and the Waterfront Plaza is best carried out by someone who has real expertise and skills in this area."

Forth Ports has appointed Jones Lang LaSalle (JLL) to market the property to international investors.

David Raven, head of retail investment at JLL will lead the sale. In 2009 Raven led the sale of Silverburn shopping centre for 250m.

He said: "We anticipate receiving a lot of interest from domestic and oversees investors and developers."