Shopping centre changes hands in £130m deal
ONE of the region’s leading shopping centres has exchanged hands in a £130m deal.
Specialist retail property company Capital & Regional has exchanged contracts with its capital partner, an affiliate of funds managed by Oaktree Capital Management, a subsidiary of Oaktree Capital Group, to The Kingfisher Shopping Centre in Redditch.
The acquisition, which is expected to complete later today, will be made through a new joint venture vehicle formed specifically for this purpose.
The transaction represents an 8% net initial yield from clients of Scottish Widows Investment Partnership.
Kingfisher occupies a 27-acre site and supports 1m sq ft of retail space. This is supported by 2,800 car parking spaces, an integrated bus station and an adjacent rail station. Anchor retailers include Debenhams, M&S, Primark, Next, Arcadia and TK Maxx. An Apollo multi screen cinema provides a leisure focus.
The centre produces a current net income of £11m per annum. Within the scheme, Zone A rental values range from £65 to £75 per sq ft.
The current occupancy including strategic voids is 95.9%, while the weighted unexpired lease term is nine years, 11 months.
The deal could pave the way for growth as C&R said it had established demand from both retail and leisure operators who are either not currently represented in Redditch or who wish to reformat their existing stores.
C&R’s plan for the centre identifies opportunities to satisfy this demand and to reposition the mall in the minds of shoppers and retailers alike. Its aim is to grow the existing footfall of almost 200,000 per week.
The acquisition is funded by investments of £10.6m and £42.4m from C&R and Oaktree respectively, representing equity shares of 20% and 80%. The remaining funding will be provided by The Royal Bank of Scotland and Santander through a five-year, £86m debt facility. C&R’s investment will be made from existing resources.
Hugh Scott-Barrett, Chief Executive of Capital & Regional, said: “This is an exciting acquisition for Capital & Regional which is consistent with our strategic focus on UK retail, and dominant, community shopping centres in particular.
“Kingfisher is a classic C&R centre sharing many of the investment and retail characteristics of The Mall Fund’s core assets. Delivery of our Business Plan will generate attractive returns which will be enhanced by asset and property management fees.
“I also welcome our partnership with Oaktree. The team and I look forward to working with them to realise our joint ambitions for The Kingfisher Centre.”
John Brady, Head of Oaktree’s Global Real Estate Business, said “The acquisition of The Kingfisher Centre is reflective of Oaktree’s commitment to increase its dedicated real estate resources focussed on the UK and Europe.”
