The UK shopping centre investment market saw the highest level of activity since 2006 (where £5.4 billion was transacted), with £4.2 billion of transactions completed in 2013, an increase of 81% on the £2.3 billion transacted in 2012 and a 35% increase on the long term average (since 2006) of £3.1 billion, according to the latest research by CBRE.
This is despite no super-regional shopping centre transactions in the year, which typically distort volumes (e.g. Meadowhall in 2012, Trafford Centre in 2011, and Westfield Stratford in 2010). In total, 54 deals were completed in 2013 compared to just 29 in 2012, this compares favourably to the long-term average (since 2006) of 43 transactions per annum.
Notable transactions in 2013 included:
· Peterborough, Queensgate Centre – Invesco advised by DTZ acquired the John Lewis anchored scheme for £200 million reflecting a net return of 6.25%. The vendors Aviva and Hammerson were advised by CBRE.
· Bath, Southgate – Multi Developments, advised by Jones Lang LaSalle, sold their 50% stake in the 420,000 sq ft Debenhams-anchored centre to British Land, advised by CBRE, for £101million an equivalent yield of 5.75%
· Solihull, Mell Square – Aviva Investors, advised by CBRE, sold the long-leasehold interest in this 300,000 sq ft M&S and House of Fraser-anchored scheme to IM Properties, advised by Jones Lang LaSalle, for £44million, a net initial yield of 7.4%.
Institutional investors were the most active buyers accounting for 41% of the shopping centre market in 2013. REITs were the second most significant buyer accounting for 38% and property companies/opportunity funds 27%. This relatively even spread is a good reflection of the variety of shopping centres transacted in 2013, with a fairly equal measure of prime, best secondary and secondary assets being sold.
Shopping centres continued to attract interest from foreign investors with 39% of the buyers from overseas; the largest of these were North American investors who accounted for 23% of the market.
Rhodri Davies, Head of Shopping Centre Investment, CBRE, commented: “The attraction of the UK retail market continues to catch the eye of the international equity, with the investors coming from a variety of locations.
We predict this trend to continue in the coming year; with over £700million currently under offer and circa £850million currently on the market, we expect last year’s volumes to be matched, if not beaten, in 2014.”