Last year, Pillar transferred some of its centres into Hercules, a Jersey-registered property unit trust that it manages on behalf of itself and Equitable. Finance director Humphrey Price told GlobeSt.com that plans were well advanced to transfer three more worth £500 million ($707 million)--at Fort Kinnaird near Edinburgh, Preston and Broughton Park near Chester--into Hercules to create a £1.2 billion ($1.715 billion) fund. The move will happen 'within a matter of months' according to Price, and the additional equity will then be made available to outside investors for the first time.
In the longer term, the £130 million ($186 million) Gallions Reach park at Beckton in east London, which Pillar is financing, will also be transferred into Hercules.
Pillar is adopting a similar approach with the Wates City of London portfolio of offices that it bought last year. The three buildings, including the landmark City Point scheme, have been transferred into a separate Jersey-registered fund called CLOUT.
The move will see Pillar transform itself from a direct developer and investor into an asset manager, receiving its income in the form of management fees and dividends on its own holdings in the funds. 'We can't be in competition with the funds,' says Price.
But he says the company would continue to act as a developer, creating stock that would be transferred into Hercules or CLOUT on completion. In the City, he notes that talks were underway with other property owners to transfer their buildings into CLOUT in return for units in order to give the fund more critical mass.
Strong occupier demand in both of its markets helped drive a strong set of results for Pillar--which also invests in City of London offices--with new asset value up 13% in spite of an accelerated tax charge because of the transfer of assets offshore and pre-tax profits up 7.3% at £23.4 million for the 12 months to 31 March 2001.
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