Rockspring has purchased one of Taunton’s most popular shopping centres in a deal worth £27.55 million, reflecting an initial yield of roughly 6.65 per cent per annum. The acquisition comes hot on the heels of another shopping centre purchase in the South West, making it a busy start to 2015 for the property investor.
Orchard Shopping Centre consists of a total of 144,037 sq ft of retail space which is split between 60 units and eight residential apartments. Existing tenants, including Waterstones, Superdrug and New Look, are expected to remain within the centre for the duration of their respective leases, with the potential to renegotiate lease terms when their tenancy period is up.
Partner Richard Bains at Rockspring hinted that the property investor’s next step will be to examine ways in which the centre can be improved, potentially involving a large scale investment to make the development more competitive in the local area.
He said; “The Orchard Shopping Centre is a prime scheme in a dominant regional town, making it a strong fit with our retail strategy.
“In addition, there is clear scope for us to generate further value from the property with the development potential for an extension to enhance the leisure facilities in the town centre.
“This is a worthy addition to the ‘UK Value 2’ portfolio and takes the aggregate value of the assets now in the fund to over £200 million, with significant equity available for investment in 2015.”
Former owner RBS has already taken the first steps towards raising the value of the centre, as it invested in a wide ranging refurbishment and rebranding programme in 2009. This helped to attract several major high street brands to The Orchard, along with lowering the vacancy rate significantly.
Last week, it was confirmed that the firm had completed a deal with British Land to buy Green Lanes Shopping Centre in Barnstaple, paying £36.1 million for a popular development reflecting a net initial yield of 6.5 per cent.
As with The Orchard, Rockspring is keen to push on with a programme of improvements at Green Lanes and will immediately begin the construction of a new anchor unit for TK Maxx scheduled to open in the summer of this year. However, further improvements are expected to be made to the centre in a redevelopment project which may introduce a leisure aspect to the 140,000 sq ft scheme.
Rockspring associate partner Mischa Davis said; “Acquiring Green Lanes adds another long term asset to the portfolio.
“There is plenty of opportunity to add capital value through repositioning the scheme and improving the retail offer.”
With two deals under its belt in as many weeks, it seems Rockspring may well be one to watch in terms of retail investment in 2015.
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