Valad Europe acquires UK shopping centre for €40m

Valad Europe has acquired the Royals Shopping Centre, Southend on Sea, UK, from Orchard Street Investment Management for £33.4 mln (€40 mln), reflecting a single net initial yield of 8.45% and 7.8% on net income.

The purchase was completed on behalf of the Valad European Diversified Fund (VEDF).

The mall provides 285,000 sq ft (28,500 m2) of space over 23 retail units and 450 parking spaces.

Some 92% of the retailers are major national brands and the centre has a 27-year average weighted unexpired lease term.

David Kirkby, Valad Europe’s Chief Investment Officer, commented: 'We launched VEDF to take advantage of an anticipated narrowing of prime - secondary spreads both in the UK and Germany over the course of the fund’s life.'

The acquisition follows the recent purchases in the UK of three office assets at Wexham Springs and a retail warehouse in Aintree.

'In addition, we have a strong pipeline of deals with over £50 mln in solicitors’ hands in the UK and Germany and we are actively seeking additional suitable acquisitions in these markets,' added Kirkby. 'The fund’s initial acquisitions in the UK are typical of the type of office and retail assets we are targeting, while in Germany we are looking for offices in the top and second tier cities, selected retail assets and nationwide distribution warehouses.'

The Valad European Diversified Fund launched with initial equity of £150 to invest and a total fund capacity of £375 mln, employing leverage between 50 and 65%. The fund invests in Core Plus / Value Add assets in the UK and Germany with individual lot sizes between £5-£35 mln.