UK REIT British Land said on Wednesday that it intends to buy the 22% interest it does not already own in the Hercules Unit Trust (HUT) for a price of £150 mln (€173 mln), in line with the March 2021 valuation.
HUT owns ten prime retail parks and the deal is expected to complete in June. The deal reflects a blended net initial yield of 8%.
The acquisition reflects the UK REIT’s confidence in the retail park sector, particularly in those assets ‘which can support an ominchannel strategy’. ‘We see a value opportunity in out of town retail, reflecting increased yields and a more stable occupational market, driven by affordability and stronger demand from retailers who recognise the important role that retail parks can play in supporting an omnichannel strategy,’ the company said.
In this context, the group recently completed the acquisition of The A1 Retail Park in Biggleswade, Bedfordshire for £49 mln on a net initial yield of 8.5%. The park is let to a range of high quality occupiers including M&S, Next and Boots.
It is also exploring ‘further opportunities to acquire high quality, well located retail parks’.
