Capital & Regional ('C&R') announces the unconditional exchange of contracts to purchase The Kingfisher Shopping Centre in Redditch with its capital partner, an affiliate of funds managed by Oaktree Capital Management, L.P., a subsidiary of Oaktree Capital Group, LLC.
The acquisition will be made through a new joint venture vehicle formed specifically for this purpose.
The Kingfisher Centre is being acquired for £130 million (approx. 159 million), representing an 8% net initial yield, from clients of Scottish Widows Investment Partnership ('SWIP').
Kingfisher is a dominant sub regional mall, occupying a 27 acre site and extends to approx. 1 million ft² of retail accommodation. This is supported by 2,800 car parking spaces, an integrated bus station and an adjacent rail station. Anchor retailers include Debenhams, M&S, Primark, Next, Arcadia and TK Maxx. An Apollo multi-screen cinema provides a leisure focus.
The center produces a current net income of £11 million per annum. Within the scheme, Zone-A rental values range from £65 to £75 per ft². The current occupancy including strategic voids is 95.9%. The weighted unexpired lease term is nine years, 11 months.
C&R have established demand from both retail and leisure operators who are either not currently represented in Redditch or who wish to reformat their existing stores. C&R's asset management plan identifies opportunities to satisfy that demand and to reposition the center in the minds of shoppers and retailers alike, by building on the existing footfall of almost 200,000 per week.
The acquisition is funded by investments of £10.6 million and £42.4 million from C&R and Oaktree respectively, representing equity shares of 20% and 80%. The remaining funding will be provided by The Royal Bank of Scotland and Santander through a five-year, £86 million debt facility. C&R's investment will be made from existing resources.
Hugh Scott-Barrett, Chief Executive of Capital & Regional commented: "This is an exciting acquisition for Capital & Regional which is consistent with our strategic focus on UK retail, and dominant, community shopping centers in particular.
Kingfisher is a classic C&R center sharing many of the investment and retail characteristics of The Mall Fund's core assets. Delivery of our Business PIan will generate attractive returns which will be enhanced by asset and property management fees. I also welcome our partnership with Oaktree. The team and I look forward to working with them to realize our joint ambitions for The Kingfisher Centre."
John Brady, Head of Oaktree's Global Real Estate Business says: "Oaktree is excited by the acquisition of The Kingfisher Centre and its new partnership with Capital & Regional. The acquisition of The Kingfisher Centre is reflective of Oaktree's commitment to increase its dedicated real estate resources focused on the UK and Europe."
Source: Capital & Regional