A Strange Mix Of Investors Are Buying Shopping Centres Today

Two deals of very different sizes announced this week highlight the mixed nature of the investors willing to take a bet on buying shopping centres in the current market.

They also indicate the market may be finding a floor.

At the small end of the scale, in the UK, one deal could give heart to retail owners that have seen values consistently drop for years. Private investor Adhan Group has bought The Mall in Blackburn from Capital & Regional for £40M in an all-cash deal.

Capital & Regional said the price being paid was a premium to the £38.2M valuation put on the asset in December. That, along with recent results from the owners of larger malls like British Land and Landsec, indicates that a floor might have been found for UK malls. 

Cap & Reg said rental income from the centre is £3.7M, which puts the yield on the deal at about 9%.

Blackburn-based Adhan, led by chief executive Salim Patel, has been buying shopping centres on its home turf in the past year. In August 2021, it bought the St George’s Centre in Preston out of insolvency.

In the second deal, at the other end of the spectrum in Europe, private equity firm Oaktree has teamed up with the Otto family to launch a €1.4B takeover offer for German-listed Deutsche Euroshop, which owns 21 shopping centres in five European countries. 

The offer represents a 44% premium to the company’s share price, but a discount to the €2.4B valuer of its portfolio. 

The Otto family, one of the grand families of European retail real estate, already owns 20% of Deutsche Euroshop. Oaktree said the deal would allow the company to better navigate the structural changes affecting the retail market.