Columbia Threadneedle Investments has put a shopping centre in Scotland up for sale with a £1 reserve.
The price reflects a gross initial yield of 15,590,500%.
The fund manager is selling The Postings shopping centre in Kirkcaldy, Fife, through Allsop’s 5 February auction.
The 80,618 sq ft mall provides an annual rental income of £152,005, with 14 (some 20,000 sq ft) of its 21 units vacant. It also features a 299-space rooftop car park.
According to filings with the Scottish land registry, the shopping centre last sold for £10.3m in 2003. It first opened in 1981.
A spokesperson for Columbia Threadneedle said: “We acquired the Postings more than 15 years ago as an income proposition and it has since been re-positioned as a development opportunity, which does not fit the holding fund’s investment strategy.
“The reserve price of £1 is generating significant attention and we expect to get a considerable amount at the auction.”
Retail pressure
The eye-catching sale price partly mirrors the immense pressure that secondary and tertiary shopping centres in the UK are facing, as their occupiers retrench in response to tough market conditions.
In 2015 The Postings’ anchor tenant Tesco closed its lossmaking, 53,155 sq ft supermarket at the site, leaving a space that the landlord has since struggled to fill.
Duncan Moir, commercial auction partner at Allsop, said: “A lot of shopping centres in the UK have had difficulties, with void rates increasing while costs are not decreasing.
“It is [well-documented] that the retail sector faces a lot of pressure at the moment. Buying a large amount of retail in a scheme gives owners a lot of control over how the centre might be repositioned, whether as a shopping venue or for alternative uses. A lot of retail owners are looking at this closely.”
Falling values
In recent years, commercial property auctions have presented a dismal view of where secondary, regional shopping centre values could be heading.
The Callendar Square shopping centre in Falkirk, for example, went under the hammer in 2017 at an Acuitus sale for £1m, at a 62% yield. It was once valued at £26m, in 2006.
And last year Royal London Asset Management put The Abbeygate shopping centre in Nuneaton, which it had acquired in 2005 for £17m, up for sale via Acuitus with a guide price of £3.7m. It subsequently sold for £4.3m.
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