September 6, 2012 / 1:50 PM / 5 years ago

US pension fund buys UK mall for $446 mln

LONDON, Sept 6 (Reuters) - A U.S. pension fund has paid 280 million pounds ($445.58 million) to buy a shopping centre 50 miles west of London from a property firm owned by the Duke of Westminister, one of Britain’s richest men.

The deal for the one million square foot Festival Place mall built in Basingstoke in 2002 is the largest mall deal in almost two years in a UK market hit by government austerity measures.

The Teachers Insurance and Annuity Association and College Retirement Equities Fund (TIAA-CREF) completed the deal on Wednesday despite a huge slowdown in shopping centre openings and sales due to investor concerns over the euro zone debt crisis and the spending power of Britons.

Festival Place is one of a group of large UK shopping centres that dominate their catchment area that are prized by investors as they have weathered the tough retailing climate better than their smaller rivals.

It had attracted interest from Australian developer Lend Lease, Canadian investor Oxford Properties and the Canadian Pension Plan Investment Board, two sources familiar with deal told Reuters.

No major shopping centres are set to open in the UK this year and property consultancy CBRE Group said in May that investment in Europe’s shopping centres fell to its lowest level since the collapse of Lehman Brothers investment bank in 2008.

Other malls on sale include London & Stamford and British Land’s joint sale of a majority stake in the Meadowhall shopping centre in Sheffield, which is close to a deal with Norway’s sovereign wealth fund for upwards of 1.1 billion pounds.

TIAA-CREF, which manages $487 billion in assets for U.S. university professors and hospital workers, has stepped up its investments in Europe since opening an office in London in 2008.

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