Private Investor Gorges On Shopping Centres
M Core, the Midlands-based private property business with a £4.9B European portfolio, has bought the 461K SF Chelmsley Wood shopping centre in Solihull.
The deal — the price of which is undisclosed — takes M Core's purchases in the UK shopping centre sector to £160M over the last year.
It has £300M available for more buys and is looking at assets up to £30M and portfolios of £150M.
The pace of acquisition by private buyers in 2023 has been dizzying as the suspicion grows that values have reached, or are reaching, their low point. By the end of January M Core alone had completed six shopping centre buys including a 118K SF centre in Trowbridge, Wilshire; the 169K SF Market Quay Shopping Centre, in Fareham; Rainham Shopping Centre, in Gillingham, Kent; and Gateway Retail Park in Harwich, Essex.
In the year to date the firm has scooped 25 buys including Cwmbran Centre, Cwmbran; The Galleries, Washington, Sunderland; Aviemore Retail Park, Aviemore; and Three Spires in Lichfield.
Investment data from Knight Frank suggested 2022 saw total UK shopping centre transactions of £2.2B, encouraged by yields moving out 100bps to 8.5%. The firm described shopping centre pricing as at a deep discount to long-term value, but concluded the sector was as “one for the brave” in a depleted field of potential buyers in which private equity was unlikely to be a player. Most activity focuses on those centres with a strong and unflashy neighbourhood appeal.
Chemsley Wood was operated by Ellandi.
The centre saw a £40M refurbishment and extension in 2009, and a further £2M upgrade of public realm in 2019. It is anchored by a 75K SF Asda supermarket.
There are obvious angles to the purchase for a well-funded private buyer. The deal is likely to open the door to residential development at the site, a key appeal for investors. Meanwhile, Solihull Council is working on a town centre refurbishment.
There are also opportunities for asset management: The centre's 29K SF bingo hall has been empty for some time, with an asking rent of £1M a year.
The agent for M Core was Prime Retail and the solicitor was Clarke Willmott. Mark Bennett at KLM Real Estate acted for the vendor.
