Capital & Regional is buying the Gyle shopping centre in Edinburgh in a £40m deal.
The purchase price reflects a 13.5% yield.
The deal is being financed through existing funds held by the company, a new £16m debt facility and £23.4m that it hopes to raise through a new share offer.
Chief executive Lawrence Hutchings said: “The acquisition of the Gyle shopping centre in Edinburgh marks the first step towards rescaling our business and fully leveraging our proven skills and management expertise.”
He added: “The centre will be accretive to income from day one, with the agreed price representing a significant discount to the replacement cost and providing us with a highly attractive entry point from which we can create value. In addition, we have arranged terms with Morgan Stanley to staple debt to the acquisition at a 40% LTV capped at a cost of 6.5% fixed for five years.”
Hutchings said C&R had identified a number of asset management opportunities to create value at the centre, including refining the tenant mix and renewed focus on leasing to improve occupancy and income.
The 415,000 sq ft shopping centre sits on a 50-acre site in Edinburgh and is anchored by Marks & Spencer and a Morrisons supermarket.
It comprises a total of 88 stores and provides some £6.8m of gross annual rent. It is 94% occupied and has a weighted annual lease term of 2.1 years.
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