LaSalle pumps EUR 400m into UK out-of-town retail assets

LaSalle Investment Management has spent £360 mln (almost EUR 400 mln) in the last 12 months as it pursues counter-cyclical investment in the UK out-of-town retail market. LaSalle accounted for 29% of all out-of-town retail acquisitions over the last 12 months including Borehamwood Shopping Park, Silverlink Retail Park in Newcastle and The Eastgate Centre in Bristol.

The global real estate investment manager said it has invested heavily in the sector, based on its analysis that retail should outperform the overall market over the next five years. LaSalle believes retail assets in stronger towns and those let with good covenants will significantly outperform the market in the medium-term. Good quality warehouses, it said, will attract retailers seeking well-configured space in desirable locations and on a more affordable basis than the high street. However, LaSalle warns that tenant covenants need to be examined closely.

Alan Tripp, managing director of UK Business, LaSalle Investment Management said, 'Our strategy to invest heavily in the retail sector has already been vindicated with yields improving substantially since the start of the year - a trend we expect to continue with the weight of money wishing to come back into the sector. Indeed, since October last year we have bought £660 mln worth of retail assets overall and sold £140 mln.

'The investment market at the end of 2008 and into early 2009 was characterized by a range of distressed sellers, with open-ended funds in particular seeking to meet redemptions. We were able to take advantage of vendors who had liquidity problems and to pick out the stock we wanted. They dealt with us because we were equity buyers and they knew we would perform.’