Published on : Wed, 08 Jun 2005 00:00GMT
by : Lucy Andrews

A property portfolio of 180 Shell forecourts owned by a partnership of millionaire brothers is up for sale. The sale value is expected to exceed £400 million.

The current owners Iranian property tycoons Robert and Vincent Tchenguiz and UK millionaire brothers Ian and Richard Livingstone bought the forecourts five years ago from Shell through Octane for about £300 million.

The decision to sell these properties couldn’t be better-timed: commercial property in the UK is considered hot property these days attracting buyers not just from the UK but abroad as well. There is however a downside to the surge in demand for commercial property. Even as the number of buyers has increased, rental yield has dropped to a 20-year low.

Five years back Shell was under pressure from the City to sell retailing and property assets; the proceeds from the sale were to be reinvested in their core business. Accordingly, Shell had signed a sale and leaseback deal and carried on business from these 180 service stations scattered across the nation and on trunk routes.

The Iranian and British millionaire brothers’ partnership has hired CB Richard Ellis, commercial property consultant to market the Shell portfolio which promises a rental yield of about 5 percent to new investors.

The proposed deal comes at a time when the markets have been observing both sets of brothers doing business more as rivals than as partners. The Livingstone brothers recently bought Michael House in Baker Street, Central London. The brothers’ private property consultant London & Regional have formed partnership with Japanese bank Nomura to bid for Britain’s fifth-biggest supermarket chain – Somerfield.

The supermarket chain has also attracted the Tchenguiz brothers who bid separately by teaming up with Apax partners, Barclays Capital and the Icelandic retailer Baugur. The Iranian millionaire brothers have been busy building a large pub portfolio. Besides acquiring the Yates Group, they have also signed a deal for a £345 million portfolio of pubs from the Spirit Group.