A secondary shopping centre in Dumfries has been sold to a private propco for just shy of a 30% yield.
The 95,000 sq ft Loreburne Shopping Centre in the Scottish market town was offered in the latest Allsop commercial auction with a guide of £2.75m-£3m and sold prior for just under £3m. The centre’s asset manager was Edinburgh House Estates.
With income of £882,567 pa, the sale price equates to an eye-watering yield for the Midlands-based family-run business that has bought it. However, the centre will now require some intensive asset management from its new owner, which is understood to have previously focused on the office sector.
The Loreburne’s largest tenant is JD Sports, which has a 10-year lease from 2016. A further 29 of the 42 units have lease reversions over the next five years and two are vacant. The centre, close to Dumfries railway station, also has an 80-space town centre car park.
It last changed hands in 2014, when Edinburgh House successfully competed for six secondary shopping centres put up for sale by the Glanmore Property Fund. Loreburne was one of the smaller centres in the portfolio, which was brought to market for around £80m – a 9.5% yield. It was seen at the time as a test of investor appetite for secondary shopping centres.
That appetite is now being tested again, and in far more challenging circumstances for the retail sector, with a succession of centres being offered through the auctions market. Allsop partner George Walker said the auctioneer’s February sale of West Orchards Shopping Centre in Coventry “made owners and buyers alike sit up”. He added: “It showed that there is liquidity in the market for these assets.”
West Orchards, where the largest tenant was Debenhams, which went into administration last year, was sold to a London-based buyer for £4.85m, reflecting a gross yield of almost 50% (net yield 46%).
Walker said there was considerable overlap in the interested parties looking at the two assets.
Auction highlights
Allsop raised a total of £54.6m from its 23 March auction, with 82 of 106 lots finding buyers – a success rate of 77%.
Two ongoing portfolio break-ups contributed to the total, with 34 Santander banks and 22 Boots stores listed in the catalogue.
The bulk of the Santander branches were snapped up, with one withdrawn and seven still available. Sales included a branch in Croydon, south London, on a five-year lease from 2020, which fetched £1.6m – a net yield of 5.7%.
The Boots stores also performed well, with four remaining available and one withdrawn. Yields achieved ranged from 5.5% for a store in Kingsbridge, Devon, to 9% for a store in Ryde on the Isle of Wight.
Other highlights from the sale included a former nursing home on a nine-acre site in Chepstow, Gwent (pictured above), which sold for £1.5m. It had previously failed to sell on the private treaty market with a different agent for 12 months with a £1.25m price tag.
The market for part-vacant high street property was also tested, with two adjacent buildings in Reading, Berkshire, offered as one lot. They fetched £2.3m, a 1.3% yield. The buildings, totalling 17,500 sq ft, are made up of a vacant Grade II listed bank, a shop let to 2023 and vacant offices above.
To send feedback, e-mail julia.cahill@egi.co.uk or tweet @EGJuliaC or @estatesgazette
