Four month old Grand Central Birmingham sold for £335m
THE Grand Central shopping centre in Birmingham has been sold to property investment firm Hammerson for £335m.
It will provide a much-needed financial fillip for its cash-strapped current owner Birmingham City Council which has now exchanged contracts with London-based Hammerson – also co-owner of the nearby Bullring shopping centre.
Hammerson is said to be in advanced discussions with an existing joint venture partner about entering into a 50:50 joint venture for the future ownership of Grand Central, which was built as part of the £750m redevelopment of New Street station.
It co-owns Bullring with Henderson Shopping Centre Fund and CCPIB (formerly Canada Pension Plan Investment Board).
As part of the transaction, Hammerson has also acquired Ladywood House, a 95,000 sq ft vacant office building adjoining Grand Central with a value of £10m.
Grand Central, which opened with some fanfare in September, provides 435,000 sq ft of retail space, anchored by a 250,000 sq ft John Lewis department store. It was developed by Network Rail and Birmingham City Council.
Stores include Monsoon, Fat Face, Hobbs, The White Company, Cath Kidston, Joules, Kiehls, Jo Malone, L’Occitane and MAC.
A significant share of space is dedicated to restaurants and cafés including Carluccio’s, Yo Sushi, Pho, Ed’s Easy Diner, Caffe Concerto, Giraffe, Handmade Burger Co and Tapas Revolution.
The retail is close to fully let (96% occupancy) with topped-up annual net rental income of £13.9m. The current weighted average unexpired lease term to break is 10.4 years. Based on the price paid for the retail space the acquisition represents a net initial yield of 4.0%.
The centre has demonstrated strong performance since opening, attracting average footfall of 62,000 per day in its first three months of trading with up to 105,000 per day over the Christmas period.
Hammerson has acquired a 150 year headlease on the centre and the freeholder is Network Rail.
Total acquisition costs, including Ladywood House and fees, are £350m.
David Atkins, CEO of Hammerson, said: “The acquisition of Grand Central, a highly-prized trophy asset in the UK’s second city, is fully aligned with Hammerson’s strategy of owning top-performing retail destinations in prime locations, as demonstrated by our recent transactions in Ireland and growing exposure to European premium outlets.
“By deploying our expertise from Bullring, as well as other shopping centres around the UK, Hammerson is well placed to further enhance the consumer offer in Birmingham and achieve high returns through skilful management of Grand Central.
“We are strong supporters of the future of Birmingham and this acquisition provides us with additional exposure to the city’s fast growing economy.”
Councillor John Clancy, leader of Birmingham City Council, said: “Hammerson has been a long-standing partner in Birmingham and we are delighted they share our vision for the city. With the addition of John Lewis anchored Grand Central, Birmingham has become the only UK city outside of London boasting the ‘big six’ leading department stores, reinforcing our position as one of the leading national retail destinations.”
Andy Street, managing director, John Lewis Partnership, said: “The development of Grand Central is great news for Birmingham and it cements Birmingham’s position as a retail destination of choice. Our new shop has enjoyed a wonderful reception in the city, and given Hammerson’s proven expertise in managing shopping centres it can only go from strength to strength. I am delighted to see them take on the ownership of Grand Central.”
Hammerson was advised by CBRE and Birmingham City Council was advised by Cushman & Wakefield.
