News

British Land buys retail park portfolio from Brookfield for £441m

News

Tim Burke

03 October 2024

Retail

British Land has acquired a portfolio of seven retail parks from Brookfield for £441m, adding to what its chief executive called a “market-leading position” in the asset class.

The deal, which the company plans to pay for with the proceeds of a £300m equity raising, is priced with a net initial yield of 6.7%.

The portfolio includes Elliott’s Field Shopping Park in Rugby; Central Retail Park in Falkirk; Wellington Retail Park in Waterlooville; Ravenhead Retail Park in St Helens; Cleveland Retail Park in Middlesbrough; Forge Shopping Park in Telford; and Chilwell Retail Park in Nottingham.

The assets have a passing rent of £29.5m and an estimated rental value of £30.4m. They are 99% occupied and each have what British Land called a “major superstore” anchor tenant, including Marks & Spencer, Tesco and Sainsbury’s.

Chief executive Simon Carter said: “The acquisition of this high-quality portfolio builds upon our market-leading position in retail parks. Parks remain the preferred format for retailers and we have deployed £711m of capital into this subsector since 1 April 2024.”

“These assets offer an attractive yield and strong rental growth prospects in line with our guidance of 3-5%. Combined with the proposed placing, they will be immediately earnings-accretive and are expected to deliver double-digit ungeared IRRs.”

The REIT has added a string of assets to its retail park portfolio this year, spending £240m on six sites between April and September.

Matthew Reed, BL’s head of retail parks, told EG earlier in the year that the company was “agnostic about taking assets in regions” where other buyers might see more risk.

Alongside news of the deal and placing, British Land issued a trading update for the six months to 30 September. Carter said: “The broader business also continues to trade well with a good level of leasing in the period and cost discipline underpinning our profit performance. We expect portfolio values to be marginally up for the half year, with continued ERV growth across the portfolio.”

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British Land, retail parks

British Land has acquired a portfolio of seven retail parks from Brookfield for £441m, adding to what its chief executive called a “market-leading position” in the asset class. The deal, which the company plans to pay for with the proceeds of a £300m equity raising, is priced with a net initial yield of 6.7%. The portfolio includes Elliott’s Field Shopping Park in Rugby; Central Retail Park in Falkirk; Wellington Retail Park in Waterlooville; Ravenhead Retail Park in St Helens; Cleveland Retail Park in Middlesbrough; Forge Shopping Park in Telford; and Chilwell Retail Park in Nottingham. The assets have a passing rent of £29.5m and an estimated rental value of £30.4m. They are 99% occupied and each have what British Land called a “major superstore” anchor tenant, including Marks & Spencer, Tesco and Sainsbury’s. Chief executive Simon Carter said: “The acquisition of this high-quality portfolio builds upon our market-leading position in retail parks. Parks remain the preferred format for retailers and we have deployed £711m of capital into this subsector since 1 April 2024.” “These assets offer an attractive yield and strong rental growth prospects in line with our guidance of 3-5%. Combined with the proposed placing, they will be immediately earnings-accretive and are expected to deliver double-digit ungeared IRRs.” The REIT has added a string of assets to its retail park portfolio this year, spending £240m on six sites between April and September. Matthew Reed, BL’s head of retail parks, told EG earlier in the year that the company was “agnostic about taking assets in regions” where other buyers might see more risk. Alongside news of the deal and placing, British Land issued a trading update for the six months to 30 September. Carter said: “The broader business also continues to trade well with a good level of leasing in the period and cost discipline underpinning our profit performance. We expect portfolio values to be marginally up for the half year, with continued ERV growth across the portfolio.”