Cerberus has secured an off-market deal to buy a town centre shopping scheme in Scotland as it continues its assault on the UK secondary market.
The New York investment firm, with asset manager Edinburgh House, has paid £42m – a 7.35% yield – for the 350,000 sq ft Motherwell shopping centre. It has been bought from Chester Properties and Schroders, which paid £35m – a circa 8% yield – for the 85-store mall in 2010.
The yield is much keener than the current average for secondary malls, which is hovering around 8%. Sources said this reflected Cerberus’s and Edinburgh Houses’s ambitions to build a major portfolio in the sector.
The Motherwell acquisition will take Cerberus’s investment in UK secondary shopping centres to more than £200m, with a further £250m in the pipeline, in a little less than a year.
With Edinburgh House it already owns the 850,000 sq ft, six-asset portfolio that made up the Glanmore Property Fund, and the 630,000 sq ft Clyde shopping centre, which it bought from Helical Bar for £70m in February.
The pair have been in talks to buy the £250m Project Charlotte, a portfolio of seven regional malls owned by the Mars Pension Fund since May. However, a deal has yet to be secured.
Activity in the shopping centre market slowed during the second quarter of 2015, but there are signs of transactions picking up in Q3, according to the latest report from Knight Frank.
Just less than £750m of malls were traded in the three months ended June, down by almost a third on the corresponding period in 2014.
Coady Supple advised Chester Properties/Schroder; JLL is acting for LaSalle Investment Management on behalf of Mars Pension Fund; CBRE represents Cerberus/Edinburgh House.
