Henderson Park has bought the Silverburn shopping centre in Glasgow for less than half the price Hammerson and Canada Pension Plan Investment Board (CPP Investments) paid for it 10 years ago.
The London-based private equity real estate firm said it had exchanged contracts for the 100,000sqm mall in an off-market transaction for £140m (€164m) alongside its operator partner Eurofund.
The shopping centre, which opened in 2007, went into administration in 2009 before being acquired in 2010. At the time, UK-listed retail specialist Hammerson and CPP Investments paid £297m for Retail Property Holdings, the main asset of which was the freehold interest in Silverburn.
Hammerson said Silverburn had been sold at a 4% discount to its book value on 30 June 2021 of £147m and a net initial yield of 9.3%.
Silverburn is the largest of six non-core assets sold by Hammerson in the second half of the year. The other five were sold for £22m at a premium to 30 June 2021 book values.
The centre has 125 grocery, retail and leisure units, including Next, Marks & Spencer and TK Maxx. A leisure extension in 2015 added a Cineworld cinema and 11 restaurant units, including Pizza Express, Five Guys and TGI Fridays.
It sits on a 67-acre freehold site, which also includes 4,500 car parking spaces and the largest Tesco in Scotland, under a long leasehold interest.
Henderson Park said Silveburn was 78% occupied and rent collection from the remaining tenants had been strong standing at 92% for in the third quarter.
Christophe Kuhbier, managing director of Henderson Park, said: “Silverburn with its large catchment area close to one of the UK’s largest cities has limited direct competition and posted robust footfall levels and cash collection this year.
“With retail valuations under pressure in recent years, we have been monitoring the UK prime retail market and we see here an excellent opportunity to acquire this asset off-market and invest in a modern asset with immediate upside potential.
“Alongside our specialist operating partner Eurofund, our asset management plan aims at attracting new occupiers that focus on leisure, food and beverage and experiential retail sectors, completing the repositioning of the asset as a premier retail and leisure destination.”
Ian Sandford, chairman of Eurofund Group, said: “We are excited by this opportunity to unlock latent value from this exceptional top-20 UK shopping centre asset which has to date been underperforming.
“We aim to use our team’s asset management and operational expertise to bring the shopping resort concept and return Silverburn to the offering and performance levels the people of Glasgow deserve and to help it exceed its potential.
“Glasgow’s profile in the UK was highlighted recently as it was selected as the host city for climate-change summit COP26. Furthermore, international brands have expanded their footprint in Scotland at Silverburn, most recently Tommy Hilfiger – demonstrating the attractiveness of the flagship destination globally.”