BAA McArthur Glen Announces Institutional Consortium Joint Venture On Europe's Largest Outlet Center At Cheshire Oaks.

LONDON--(BUSINESS WIRE)--Oct. 12, 1998--BAA plc, the UK-based airport company, today announced that BAA McArthur Glen, the leading European Designer Outlet Center developer and operator, has finalized a joint venture for its Cheshire Oaks Designer Outlet Center with a consortium of four UK institutions consisting of BP Pension Fund, CIS (Co-operative Insurance Society), NPI and Norwich Union.

The transaction gives the institutional consortium a 75% stake in Cheshire Oaks and leaves the balance with BAA plc and McArthur Glen Europe, the 50:50 joint-venture owners of BAA McArthur Glen. In addition BAA McArthur Glen will retain the long-term management of the center as well as the responsibility for completion of the final 70,000 sq. ft. phase of the development which will take the Designer Outlet Center to nearly 350,000 sq. ft.

The transaction, creating a new limited partnership, involves initial payments in excess of (pound)150m. The structure also allows for further performance related payments to BAA McArthur Glen over the next few years which could increase the total consideration to a number in excess of (pound)200m.

BAA's Chief Executive, Sir John Egan, said: "The success of this joint venture demonstrates again that BAA understands its core skills and how to use them prudently to create maximum shareholder value. This transaction recognizes that BAA and McArthur Glen Europe have successfully integrated their separate skills and cultures. As each outlet mall site matures BAA McArthur Glen will realize value, whilst retaining a long term commitment to ongoing management of the centers. BAA has also strengthened its relationship with key airport suppliers and has used its outlet mall experiences to develop new airport and duty free retailing concepts."

J. W. Kaempfer, Chief Executive of BAA McArthur Glen said: "We decided to pursue the strategy of bringing in new joint-venture partners for completed properties at the end of last year and since then we have had discussions with a number of parties. Investment interest in this proposal has been overwhelming and we are particularly pleased to be working with the four institutions in the consortium. The property is performing extremely well and its performance will be further enhanced when we add the final phase which will reinforce the Center's dominant position in the North West."

A representative speaking on behalf of the consortium, said: "All the investors in the consortium have identified the Designer Outlet business as a major growth area and are delighted to make Cheshire Oaks their first investment in this area alongside BAA McArthur Glen's market asset management skills. The structure is particularly appealing to the investors since BAA McArthur Glen are retaining a significant co-investment interest and since a proportion of the financial consideration is linked to their on-going performance as managers. The consortium is well placed to agree further joint ventures on investment opportunities in this exciting new retail sector as they occur."

Jones Lang Wootton advised BAA McArthur Glen and DTZ Debenham Thorpe advised the consortium.

The joint venture currently has operations trading at four locations. In addition to Cheshire Oaks there is a site at Troyes near Paris, at Swindon, at Bridgend, west of Cardiff, and at Parndorf in Austria. Further sites at Mansfield in Derbyshire and York are due to open respectively in October and November this year, with another three or four sites already planned in each of the following two years.

BAA ordinary shares trade on the London, and Australian Stock Exchanges; prices may be accessed on Bloomberg under the symbol BAA LN, on the Reuter Equities 2000 Service under BAA.L and on Quotron under BAANU.EU. BAA ADRs, each equal to one ordinary share, appear on the pink sheets under BAAPY. Additional information is available on BAA's home page: http://www.baa.co.uk.