Leo Noé’s REIT Asset Management is poised to buy Fosse Park for £20m less than Pillar Property was asking last year.
REIT, which raised £400m through property disposals last year, is offering £300m for the 417,000 sq ft retail park. Pillar put Fosse Park on the market with a guide price of £320m, representing an initial yield of 5.6%, in June on behalf of Hercules Unit Trust.
However, a deal with Prudential fell through at the end of the year. Rents at Fosse Park are the highest for retail warehousing in the country, with some at more than £90 per sq ft, and Pillar was said to be selling because it did not see strong performance over the next few years.
A source said: “I’m not sure that Pillar ever really expected to get the asking price. It’s been on the market for six months now and there has got to be a question mark over the growth prospects. I think that if they got something starting with a three then they would be quite pleased.”
Industry experts said that a sale at around a 6% yield would compare favourably with shopping centres, with which Fosse has more in common as an asset than retail warehouse parks.
REIT is considering several measures to get further growth out of Fosse Park, including moving the food court and Bhs store, and adding a decked car park to deal with the lack of parking.
Kevin McGrath, a partner at REIT, said: “We are looking at lots of stuff in the market at the moment because we are very cash rich, but I cannot comment either way on Fosse Park.”
However, a source close to the deal said: “If REIT can buy one of the best things in the country, then it will.”
CBRE is the selling agent.
