Capital & Regional, which is structured as a stock market-listed real estate investment trust (REIT), has acquired the Gyle shopping centre in Edinburgh for £40m.
The new owner said the sprawling mall with 88 retail units over 415,000 sq ft would require “minimal immediate capital expenditure” though it pointed to a “clear medium-term opportunity for significant value add initiatives”.
There was no clarification on whether the plans unveiled in 2021 for aradical reshaping of the 50-acre site could be affected by the change of ownership.
Capital & Regional said the centre was complementary to the company’s existing portfolio and provided an opportunity for the firm to apply its “management capability and experience” to improve the retail and services offering.
The Gyle opened in October 1993 and is anchored by one of Marks & Spencer’s largest stores and a Morrisons supermarket.
With a 2022 footfall total of 8.6 million, the mall has 2,800 car parking spaces and is served by the tram and buses.
Capital & Regional said the deal with Gyle Shopping Centre Trustee is being funded by existing funds held by the company, a £16m debt facility, a share offer to raise proceeds of about £23.4m (net of fees, costs and expenses), and the group’s existing cash resources.
The asset is being acquired at a net initial yield of 13.51% that is expected to rebase to around 12%.
The acquisition is expected to deliver “significant earnings enhancement” in the first full year of ownership.
Lawrence Hutchings, chief executive of Capital & Regional, said: “This acquisition allows us to capitalise on an opportunity to add an established dual supermarket anchored community centre in Scotland’s capital city to our portfolio.
“We have also identified a number of asset management opportunities to create value including refining the tenant mix, a renewed focus on leasing to improve occupancy and income, whilst enhancing the centre’s appeal to the growing and affluent catchment in south western Edinburgh.”