A cash buyer with a belief in the future of retail has snapped up a 200,000 sq ft Coventry shopping centre at auction for £4.85m.
The sale price for the West Orchards Shopping Centre reflects a gross yield of almost 50% (net yield 46%). However, the largest tenant was Debenhams, which went into administration last year, and a large number of leases revert this year or in the next few years. Other tenants include Marks & Spencer and WHSmith.
The experienced London-based investor saw off competition from bidders based in Singapore and the US as well as the UK, auctioneer Allsop said.
The centre was initially guided at £5.5m, but this was revised down to £4.75m ahead of the auction on 3 February.
Allsop said the successful bidder sees the cash buy as an opportunity to capitalise on demand for space in the future, including from tenants displaced as and when the adjacent 15-acre City Centre South regeneration scheme – a joint venture between Shearer Property Group and Coventry City Council – moves forward.
Allsop partner George Walker said: “The buyer is a partnership between very experienced retail asset managers. They believe in retail. This is not a change-of-use play.”
The centre is held on two 99-year leases from Coventry City Council with 67 years remaining, or 118 years if extended. It was developed by Modus, which went bust in the last recession.
The West Orchards Shopping Centre was put up for sale by UK REIT RDI, which has been steadily reducing its retail exposure.
Allsop raised a total of £30.3m from the online sale, with 42 assets finding buyers – a success rate of 80%.
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