Portsmouth: Canada Life agrees £73m Wightlink Ferry Terminal deal
Canada Life has agreed a £73 million income strip-lease deal with Portsmouth City Council over the Wightlink Ferry Terminal. Advised by GVA, the Council has granted Canada Life a new long leasehold interest for a term of 41 years. In return the Council has entered into an overriding 41-year lease at a rent of over £2m per annum subject to upward only annual RPI rent reviews.
The property was originally let to Wightlink on identical terms and this occupational lease will remain in place.
The structure allows Portsmouth City Council to retain its existing freehold interest while maximising capital receipts of this major South Coast infrastructure hub linking the Isle of Wight to the UK mainland.
The site totals approximately 3.27 acres and the operator has recently obtained planning approval to undertake an extensive refurbishment, which will be constructed by spring 2017 as part of Wightlink’s £45m capital investment programme.
The ferry terminal is located adjacent to Gunwharf Quay and the historic Naval Dockyard. Gunwharf Quay is one of the main leisure and retail areas of Portsmouth, containing 90 outlet stores and 30 restaurants, bars and cafes. The development is a mix of modern facilities and refurbished historic buildings such as the Grand Storehouse and the former Gatehouse and perimeter wall.
Tom Southall from Portsmouth City Council said: “The deal we have signed with Canada Life will have no impact whatsoever on the service Wightlink provides. What it will do though is to allow us to use the capital we receive from Canada Life to invest through our property-investment strategy, generating at least an extra £2m per year. This deal has enabled us to more than double the amount of money we receive by way of rent from Wightlink annually.”
Michael White, property investment director at Canada Life, said: “Canada Life was very pleased to be selected as the preferred bidder against stiff competition. The income stream secured from the Council provides an ideal match for the company's income-annuity liabilities.
“The income strip structure is a novel way for the private sector to provide financial support to the public purse while leaving the reversionary value in public sector hands. The transaction rounds off a busy year for the Company’s annuity business despite challenging market conditions.”
Neil Dovey, head of transactions and çapital markets at GVA, said: “We are delighted to have disposed of this rare investment opportunity to Canada Life. There was substantial competition from the traditional annuity funds reflecting the desire to acquire undoubted income streams at such low yields.”
