Hammerson plc has acquired a 50% interest in the freehold of Queensgate Shopping Centre in Peterborough from Norwich Union Life & Pensions for a total consideration of £156 million.
Constructed in 1982, Queensgate Centre is a fully enclosed two level shopping center providing approximately 75,000 m² (807,000 ft²) of retail accommodation anchored by John Lewis, Waitrose, Marks & Spencer and Bhs. The center provides a further 127 shop units and 2,300 car parking spaces. The property generates a total net rental income of approximately £16.6 million per annum and is 15% reversionary.
Hammerson and Norwich Union now own the center through a 50:50 joint venture. The parties have worked together over the last three years in partnership with the City Council and plan to carry out a major expansion of the center by redeveloping the adjacent site at North Westgate, a planning application for which will be made during 2006. Part of the land to be redeveloped is also owned by the joint venture. Hammerson will be the asset and development manager for the joint venture. The existing centre will also be subject to a major refurbishment.
The extension will provide additional accommodation of approximately 60,000 m² (646,000 ft²), including a new shopping street leading from the existing Queensgate Centre to a new anchor store. The scheme will also incorporate restaurant and catering accommodation around a new city square, together with residential accommodation and an additional 900 car parking spaces. Following completion of North Westgate, the Queensgate Centre will total approximately 135,000 m² (1,450,000 ft²), with 3,200 car parking spaces, making it one of the largest retail centers in the UK.
John Richards, Chief Executive of Hammerson plc, said: "This acquisition reflects Hammerson's strategy of investing in dominant shopping centers in strong retailing locations. We see scope to improve this prime asset through a combination of pro-active management and the development of additional retailing accommodation to address the needs of retailers seeking representation in the City. Peterborough's population is growing at one of the highest rates in the UK, making it an extremely attractive city in which to invest."
Ian Womack, Managing Director Property of Morley Fund Management, which acts as Asset Manager on behalf of Norwich Union, said: "Morley Fund Management has been working closely with Hammerson on the future development of Queensgate for the last three years. This partnership combines Morley's fund management leading edge expertise with Hammerson's pre-eminent track record in property development and, we believe, will unlock significant value for our clients."
Councillor Ben Franklin, Leader of Peterborough City Council, said: "The City Council has been working with Hammerson and Morley on this scheme for some time and will continue to do so. We have been impressed with the commitment of Hammerson and Morley in developing their North Westgate plans with us over the last three years. We see Hammerson's investment in the City as a significant step forward in achieving a key element of the City's masterplan and are delighted that Hammerson has joined Morley in this joint venture given its unrivalled track record of regenerating city centers."