British Land was forced to write off almost all of its initial investment in the 475,000 sq ft Royal Victoria Place shopping centre in Tunbridge Wells, Kent, EG can reveal.
The REIT sold the shopping centre to the local authority in October last year. A number of NDAs meant the sale price of the mall was undisclosed but EG can reveal the council snapped up the building for just £8.1m.
The price is a more than 91% reduction on the £91m British Land paid Hermes for the centre in 2018.
BL is understood to have spent almost £120m on the asset over its five-year ownership on refurbishment and drawing up plans for a part redevelopment that was scuppered by the coronavirus pandemic.
All in, the REIT lost around £112m on the investment.
British Land declined to comment on the transaction but sources said the REIT had chosen to shoulder the losses as the mall was providing negative income and was not core to its portfolio. The REIT is also understood to have had the mall valued at around £4m.
A source said: “Shopping centres are non-core for British Land and this sale just confirmed its conviction on retail parks. This is not an asset it saw as a valuable part of its portfolio. And let’s face it, they are not the only one to have taken a significant haircut a on shopping centre. It’s better to have sold at £8m than the book value.”
The 99-store shopping centre is anchored by Fenwick and Marks & Spencer, and currently has a vacancy rate of 33%.
The council has owned the freehold of the centre since it was built in 1992 and believes it is uniquely placed to secure its future and its contribution to the town centre. The council said it was committed to ensuring Royal Victoria Place continues to play a strong role in maintaining the attractiveness of the town for residents, employers and visitors.
RivingtonHark is now advising Tunbridge Wells Borough Council on the strategic direction of the mall. Together the pair have already lowered service charges by around 12% and are understood to be having positive conversations with Fenwick, which occupies 90,000 sq ft in Royal Victoria.
Knight Frank advises the council.
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