TIAA Henderson is preparing to appoint Cushman & Wakefield to explore the sale of as much as a 50% share in the £850m redevelopment of the St James shopping centre in Edinburgh.
Cash raised in the sale will help the fund manager finally start building the project, which has been in the planning system since 2008.
Stephen Wicks, director of shopping centres at TH Real Estate and fund manager of the UK Shopping Centre Fund, said: “We have appointed Cushman & Wakefield to represent us in finding an investment partner and will be going out to market at the appropriate time.”
He added: “At this point in the project’s lifecycle our focus is on progressing towards detailed planning in June and a CPO inquiry later this year.”
The shopping centre is being vacated next year in order for construction to begin, with completion anticipated by 2020.
The sale will be a litmus test for the shopping centre development market, which has been largely subdued since the downturn.
Henderson UK Shopping Centre Fund purchased the St James centre from Irish investor Donegall Place Investments for £184m in 2006. Redevelopment of the 1970s-built structure – one of Edinburgh’s best-known eyesores – has been held up due to a series of complexities over the past eight years.
The owner has had to undertake an arduous land assembly and battle with the CPO process. The timing of the project, which got planning just as the financial crisis hit, meant that funding such a large-scale development was also challenging. Moving tenants out of the existing centre and committing them to a new scheme has further hampered progress.
Existing anchor tenant John Lewis, which would be key to a successful redevelopment, runs one of its most profitable UK stores from St James.
TIAA Henderson and John Lewis are in ongoing discussions regarding the future of John Lewis Edinburgh, but current plans will see it remain in its existing site for the duration of construction.
The new Edinburgh St James will comprise 750,000 sq ft of shops over three levels and is expected to secure Edinburgh’s place as the retail capital of Scotland, ahead of rival Glasgow.
The scheme will also include a luxury 210-bedroom hotel, as well as a separate 41,000 sq ft aparthotel.
The residential element of the scheme has consent for up to 250 homes.
The residential and hotel developments are being marketed separately as investments by JLL and Rettie & Co.
