Shopping centre investments exceed 4.1 billion pounds

UK shopping centre investment transactions have reached approximately 4.1 billion pounds and could total up to nearly 4.35 billion pounds for 2013, according to new research from DTZ. The figure for the 2013 research, up to December 20, is calculated from transactions comprising of 74

shopping centres across the country, compared to 29 shopping centre transactions totalling 2.5 billion pounds in 2012. Making overall transaction levels for 2013 significantly higher than the five-year average.

The record year started off with a strong Q1, with UK shopping centre investment transactions totalled approximately 1.36 billion pounds, for 18 shopping centres. Transaction volumes remained steady in Q2 and Q3 2013, with 17 shopping centre transactions in both quarters, totalling circa 865 million pounds and 835 million pounds respectively for each. With the year ending in the same way it began with over 1.1 billion pounds in Q4 2013 in 22 transactions, equating to a sum of around 4.1-4.35 billion pounds for the entire year.

Barry O’Donnell, DTZ’s head of shopping centre investment said: “As we saw at the start of the year, the shopping centre investment market is ending the year strongly. There has been an emergence of new global entrants into the market targeting prime assets while UK retail funds are now focusing on the secondary market, albeit selectively.

“This will carry on into the New Year and we expect to see yields continue to harden. Q1 2014 promises to be a busy period, similar to Q1 2013. We are delighted to have acquired Queensgate centre in Peterborough which is the standout deal of the quarter.”

Some of the larger transactions in 2013 included the acquisition of Midsummer Place in Milton Keynes in Q1 for 250.5 million pounds, the sale of the Eastgate Centre, Freshney Place and Coopers Square together as part of the Dollar Portfolio in Q1 for 246 million pounds, as well as the Q2 2013 acquisition of a 33.3 percent stake in The Bullring, Birmingham for 307 million pounds.

Queensgate sells for 202 million pounds

The standout asset transaction in the fourth quarter was Invesco’s purchase of Queensgate Centre in Peterborough from Hammerson and Aviva. The 900,000 square foot shopping centre has more than 100 stores and restaurants and sold for 202 million pounds.

Meanwhile, several high profile deals went under offer towards the end of Q4, including the sale of a 50 percent stake in Cabot Circus in Bristol for 270 million pounds, and a 50 percent stake in the TheCentre:MK in Milton Keynes. These investment transactions, as well as the nearly 20 others being marketed or being prepared for market, suggests a lively start to 2014.

Jonathan Rumsey, head of retail market analysis at DTZ, added: “The UK economy has seen a substantial improvement since the middle of the year and is forecast to grow 2.4 percent in 2014. The retail market, although still vulnerable to changing consumer trends, has seen improving consumer confidence which should carry on into the New Year.

“In respect to shopping centre investment volumes, with new global entrants forcing UK retail funds to target secondary stock, we expect this segment of the market to outperform prime next year.”

Image: Peterborough's Queensgate centre