British Land has acquired a portfolio of seven retail parks from Brookfield for £441m.
The sale price reflects a net initial yield of 6.7% and a topped up net initial yield of 7.2%. The assets, which are 99% occupied, generate a passing rent of circa £29.5m, a topped up passing rent of circa £31.9m and an ERV of circa £30.4m.
The 1.9m sq ft portfolio has a weighted average unexpired lease term of 4.5 years to break and 5.9 years to expiry.
The portfolio comprises: Elliott’s Field Shopping Park, Rugby; Central Retail Park, Falkirk; Wellington Retail Park, Waterlooville; Ravenhead Retail Park, St Helens (pictured); Cleveland Retail Park, Middlesbrough; Telford Forge Shopping Park, Telford; and Chilwell Retail Park, Nottingham.
British Land said the acquisition would be funded by a proposed equity placing of approximately £300m, with the remainder of the consideration financed from existing cash and in place facilities.
Simon Carter, chief executive of British Land, said: “The acquisition of this high quality portfolio builds upon our market leading position in retail parks. Parks remain the preferred format for retailers and we have deployed £711m of capital into this sub-sector since 1 April 2024. These assets offer an attractive yield and strong rental growth prospects in line with our guidance of 3-5%. Combined with the proposed placing, they will be immediately earnings accretive and are expected to deliver double digit ungeared IRRs.”
In a trading update for the six-month period ending 30 September 2024, British Land said it expected its underlying profit to be £142m to £144m, compared with £142m in the same period last year, with underlying earnings per share of 15.2p to 15.4p compared with 15.2p last year.
The company said it expected values to improve marginally by circa 0.2%, with retail park values increasing by circa 5% and the valuation of its campuses and London urban logistics assets falling by circa 1.6% and 2.6% respectively.
Carter added: “The broader business also continues to trade well with a good level of leasing in the period and cost discipline underpinning our profit performance. We expect portfolio values to be marginally up for the half year, with continued ERV growth across the portfolio.”
