AEW UK Core Property Fund has bought the Five Ways Entertainment Centre on Broad Street, Birmingham, out of administration for £25.1m.
The acquisition reflects a 9.5% purchase yield. The 215,000 sq ft property is let to 11 leisure tenants – Cineworld, PureGym, a casino, nightclub and seven restaurants, including Nando’s and Five Guys – and two leases to Euro Car Parks, with a combined WAULT of over 11 years to expiry.
The deal represents a 28.3% discount to purchase price. Cromwell Property Group’s European diversified fund had initially put the asset up for sale in 2018 with an asking price of £44.7m, at a 6.25% net initial yield. Previously known as Valad Europe, Cromwell first bought the complex in 2014 for £35m from UK & European Investments in 2014.
Grant Thornton was appointed as administrators to the vehicle that held the centre in October last year, after the search for a buyer failed and the debt fell into default. Other affected vehicles were the 160,000 sq ft Garden Square shopping centre in Letchworth and Blackpool’s Festival Leisure Park.
Edward Long, director at AEW, said: “The city has seen a renaissance over the past 10 years, with significant developments such as Grand Central, Birmingham Library, Brindley Place, and numerous office and residential schemes.
“We believe the fundamentals remain very attractive, with Birmingham’s growing young professional and student population driving demand for entertainment and residential accommodation.
“Covid-19 restrictions have had a huge impact on the leisure sector. However, leisure is fundamental to people’s wellbeing across all demographics. Leisure activities are no longer just for special occasions, most UK consumers regard leisure as an integral part of daily life. As such, we look forward to Covid-19 restrictions lifting and a return to normality and anticipate a strong bounce back in the leisure sector.”
Lunson Mitchenall acted on behalf of AEW UK Core Property Fund in the acquisition.
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