Axis Retail Partners has acquired a Greater London shopping centre on behalf of pension fund clients of LaSalle Global Partners Solutions.
St George’s Shopping Centre in Harrow was sold off-market at net-initial yield of 8.3% by UK-listed RDI REIT for an undisclosed sum.
Toby Smith, co-founder and CIO of Axis, said “now is the right time to start investing” in the UK retail market as it “starts to recover from COVID”.
Smith founded Axis in 2018 with former CBRE Investment Management colleague Florencio Beccar in partnership with Generali.
“We are very pleased with having been able to execute our first UK deal,” he said. “We have been active in the UK market for almost two years.”
The 215,000sqft shopping centre was refurbished in 2015 and has an annual footfall of about nine million customers
It is fully let following several new lettings, including H&M, Puttstars, Haute Dolce and Trespass, and holds a Very Good BREEAM In-Use rating.
The rental levels at the centre have been rebased with 52% of retail income either renewing or re-letting over the past 18 months.
Sales have been improving and for some of the major tenants are said to be “close to 2019 levels”.
Axis will be tasked with increasing sales performance, in part by applying its proprietary sales analytics tool Origin.
“We are focusing on assets which are relevant retail destinations and that have a demonstrated track record of strong performance, a rebased rental level and offer an attractive income yield to our clients,” Smith said.
“If all this verifies, we believe this entry point is extremely compelling with attractive capital values on a per-square-foot basis. From this starting point, we bring our retail expertise and proprietary systems to manage the assets with a view to enhancing the asset’s sustainability and relevance so that they can form an important part of the local community over the long term.”
Robert Jewell, a former Landsec investment director who was was appointed UK managing director at Axis earlier this year, said: “I have joined Axis at this exciting juncture as I am convinced we are at a turning point in the market which is shifting towards a continental European model where relationships with our tenants will be more transparent and we will manage on the basis of the actual performance of retailers at our centres.
“Axis brings a long standing track record of managing with this philosophy and have the in-house tools to make the most of this for the benefit of our investor clients.
“I am excited to start managing St George´s, which provides all the right fundamentals for us to deploy all our management expertise and energy on behalf of our client LaSalle.”
Darren Robinson, senior fund manager at LaSalle Global Partner Solutions, LaSalle Investment Management’s indirect real estate arm, said: “St George’s Shopping Centre is performing well, benefiting from rebased rental levels and offering a very attractive entry yield.
“The high leisure and food and beverage components put the centre in a strong position to benefit from an increase in social activity over time, though of course we don’t expect that recovery to be linear in the very near term.
“We are very pleased to be working with the Axis Retail team again, having already worked with them prior to the formation of this new venture, and we look forward to working together in future.”
