Published on : Mon, 25 Apr 2005 00:00GMT
by : Lisa Pitt

Scottish Mutual and Scottish Provident which are fully owned subsidiaries of insurance and investment major Abbey National, will soon be selling about £1 billion of their property portfolio.

The bank appears to have taken the opportunity provided by the current rise in demand for commercial property. The market is witnessing soaring demand from overseas as well as domestic investors for commercial property in the UK.

The world’s leading commercial property services firm CB Richard Ellis have been appointed to execute the sale of almost the entire £1.2 billion worth commercial property held by Scottish Provident and Scottish Mutual. It is expected to be the UK’s biggest sale of commercial property.

Although a final decision has yet to be taken on the exact value of the property for sale, insiders estimate that it is likely to exceed £1 billion. According to sources, the well-diversified property portfolio includes high street shops, retail warehouse parks, offices and industrial property throughout the UK.

Proceeds from the sale will be reinvested in specialist property funds or in property company shares as well as some easy-to-trade options like cash and other equities. The deal will also help maximise returns for Abbey’s policyholders and investors.

According to market analysts, Abbey would prefer CB Richard Ellis to market the entire lot as a single portfolio. It would give the buyer, (either a fund house or an individual), not only a mixed institutional portfolio but also the opportunity to inject it into a tax-efficient Real Estate Investment Trust. Analysts also said that the decision to offload these properties was likely taken following a review of the assets of Scottish Mutual and Scottish Provident and not prompted by Banco Santander who took over Abbey.

CB Richard Ellis are currently gauging the market and analyzing the portfolio to devise appropriate sale strategy.

It may be several weeks before they begin to market the properties, but Abbey would expect the disposals to be completed during this summer.