Listed REITs and banks, British Land, Capital & Regional and Wells Fargo, bought and sold four shopping centres and retail parks this week.
British Land’s two bigger acquisitions were 300,000 ft2 Capitol Retail and Leisure Park in Preston, bought at a net initial yield of 8.43%, and a retail park in Farnborough acquired at a 7.65% NIY. The REIT’s head of investment, Kelly Cleveland said the company was seeing good occupational demand across its retail park portfolio, ‘reflected in our 97% occupancy and growing ERVs.’
Frasers Group, the vehicle of Mike Ashley, founder of retailer Sports Direct, paid £58 mln in cash for The Mall, Luton’s 900,000 ft2 town centre via a vehicle called LDI.
The shopping centre, which has 150 retailers, was put up for sale by Capital & Regional and its lender, Wells Fargo, last summer 2022, with a guide price of £81 mln. At the end of 2021, when the REIT restructured the debt on four of its other UK malls, Luton was valued at £82 mln, and the outstanding debt against it was £96.5 mln. Capital & Regional did not have the equity to cure the breach but was retained to manage the centre.
On the sale to Frasers, Capital & Regional said it had ‘previously reconsolidated its interest in The Mall’ meaning the sale ‘does not result in any profit or loss to the group’. The cash will go to Wells Fargo which will have taken a big hit on the asset.
Among transactions failing to complete was a portfolio of Irish shopping centres owned by Harcourt Development. The planned sale to Canadian investor Camgill Development Corporation broke down because lender AIB withdrew from the deal.
One thriving area in the private real estate debt market is UK student housing and there was £200 mln of new lending in this sector this week. Alternative lender Maslow Capital wrote a £114 mln loan for extensive investment in an existing block in Paddington while Investec bank provided global student housing specialist GSA with £85 mln to refinance and refurbish five assets in UK cities.
The high price of hedging was underscored in the information published by Supermarket Income Reit about refinancing an existing loan with BayernLB: £2.8mln for an interest rate swap for an £87 mln loan from BayernLB, fixed to a rate of 4.29%. However, the REIT also benefited from proceeds received from the termination of the hedging instrument on the existing facilities.
A number of deals in the €40 mln-€60 mln bracket closed: across UK logistics - at yields above 5% - a Spanish hotel and German offices.
We also track the other new loans and three funds raising.
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