Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)
Issue link: https://sct.epubxp.com/i/122387
financial climate investment firm, of Europe has staprefers what some bilized, and some might call valuesources are beginadd plays in the ning to espouse a U.K. retail space. value-add philoso"We take an interphy. "Although we est in regionally do not encourage dominant shopfilling your boots ping centers that with secondary have the potential assets, over the to become a more medium to longer leisure-oriented term we believe destination by that secondary ascreating new food sets will provide opand beverage shops The largesT deal lasT year in The U.K. was norges BanK invesTmenT portunity for inves[and] restaurants managemenT's €943 million ($1.2 Billion) acqUisiTion of a 50 percenT inTeresT in meadowhall cenTre, in sheffield. tors to find value," and adding a cinsaid Angela Goodings, associate direcnorthwest of London. The property ema," said Nick Gregory, Redefine's tor of property research at Henderson was listed at a 5.5 percent yield, but senior retail asset manager. One center Global Investors, in London. was acquired for £250 million and at in the firm's portfolio that Gregory calls The most apt term to describe the a 5.1 percent yield, O'Donnell says. a "hidden gem" is Grand Arcade ShopEuropean real estate market last year The largest deal last year in the U.K. ping Centre, in Wigan, Lancashire, is "polarization," in that capital was was Norges Bank Investment Managewhich is anchored by Debenhams, is 5 still flowing to 'A' properties in 'A' ment's €943 million acquisition of years old and measures 400,000 square locations, but very little was invested a 50 percent interest in Meadowhall feet. "International investors aren't in secondary properties. As can be exCentre, in Sheffield. "That was a suaware of the likes of Wigan, because pected, this has made a difference in per-regional, dominant scheme [shopit does not have the profile of London yields. In the U.K. an 'A' property in ping center], and the initial yield apor Manchester," said Gregory. "We are the London metro area would run a proached 5 percent," O'Donnell said. considering a cinema, adding more lei5 percent cap rate, but a midsize or While prime locations have been sure and having the scheme linked to large secondary center elsewhere in No. 1 on global investors' screens, the the local authority's refurbished town the country offered a 13.5 percent local investors and even some institucenter offices." Yields on the good recap rate, an all-time high. tional buyers have ventured up the risk gional centers that need a bit of work "This has been a tale of two marcurve. Redefine International, a Lonare about 7.5 percent, and the competikets," said Barry O'Donnell, head of don-listed, income-focused, property tion is normally U.K.-based as opposed U.K. shopping center investment at to global, Gregory says. DTZ, in London. "There is a strong Last year just six countries in Europe Last year just demand from global players look— the U.K., Germany, Sweden, Noring at prime locations in the mature way, France and Poland — accounted six countries in markets of the U.K., Germany and for 80 percent of the transaction marEurope — the U.K., France, with more-opportunistic ket, according to Jones Lang LaSalle. players scouring the more secondary Markets get even narrower when one Germany, Sweden, and tertiary markets. Although the considers that the U.K. and Germany Norway, France and returns on prime properties are low, alone accounted for over 50 percent they are still higher than the yields on of the total retail investment volume. Poland, accounted government bonds." "Germany has a number of similarities for 80 percent of the Not by much. One of the major to the U.K.," said O'Donnell. "Mostly, deals in the U.K. last year was the sale demand is at the prime end of the transaction market. of Midsummer Place Shopping Cenmarket, and there has been a big gulf tre, in Milton Keynes, about 45 miles between prime and secondary." That is 206 SCT / m a y 2 0 1 3