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Tuesday, May 30, 2023

Henderson UK Shopping Centre Fund buys St James, Edinburgh, for 184 million

Henderson Global Investors, the independent asset manager with 67.7 billion under management, has confirmed its purchase of the 450,000 sqft St James Shopping Centre in Edinburgh. The Henderson UK Shopping Centre Fund (the 'Fund') bought the Centre from Irish investor Donegal Place Investments for 184 million in a deal reflecting an equivalent yield of 5.2%.

BTW Shiells acted on behalf of the vendor and Cushman & Wakefield and Morgan Williams acted on behalf of Henderson.

In a further acquisition, Henderson has also purchased St James House, an adjoining 240,000 sqft office block, a previous home of the Scottish Office and Royal Bank of Scotland, which is situated on top of the centre. Henderson has secured the building from Omega Land Limited, the Morgan Stanley backed development company. Omega are taking units in the JPUT that now owns St James, as they wish to benefit from the long term growth of the centre.

This is the first time in the history of St James that both interests have been held by the same owner, unlocking a major regeneration opportunity in Edinburgh city centre. Henderson will be looking to appoint a design team shortly to progress its proposals to comprehensively redevelop the site.

The existing Centre, which fronts onto Leith Street and Multrees Walk, is anchored by John Lewis and comprises over fifty units. Other major tenants include Top Shop, Next, River Island and HMV.

Dominating the eastern end of Edinburgh's New Town, a UNESCO world heritage site, both the shopping centre and the office block, built in 1973, are dated and out of character with their current setting, surrounded by many period listed buildings.

Commenting on both deals, Myles White, the Henderson Shopping Centre Fund Manager, commented: "There is considerable demand for modern retail space within the city centre but a distinct lack of supply. Edinburgh's historic setting has resulted in very little suitable new retail space becoming available in recent years leading to substantial leakage of retail expenditure as retailers have gone to surrounding centres, particularly Glasgow. We are aware of demand for at least 500,000 sq ft of quality new retail space, and given the planning restrictions in the city centre, St James is the only site that can accommodate this amount of new space in a modern format and comfortable environment."

The purchase of the St James Centre is further evidence of considerable growth in the Henderson Shopping Centre Fund over the past twelve months. Since June 2005 its net asset value has grown from just under 400 million to over 760 million. Other assets in the Fund include Bullring, Birmingham; Buchanan Galleries, Glasgow; Princes Quay, Hull; and shares in Bluewater, Kent, and Touchwood, Solihull, through the Lend Lease Retail Partnership.

Myles says: "The Henderson UK Shopping Centre Fund is focused on long term investment in dominant assets in major UK cities. Henderson believes that there is major long term out performance from this investment. The acquisition of St James complements the Fund portfolio and provides strong growth prospects for our investors. We are keen to invest further in similar assets."

Neil Varnham, Head of Retail, commenting on Henderson's expanding UK and European retail business said: "Henderson continues to look for new opportunities across a range of sectors both in this country and in continental Europe. Retail property in the UK continues to offer considerable returns despite the current well publicised difficulties in the consumer economy. Dominant city centre schemes, such as St James, will continue to deliver good returns, especially when they provide significant redevelopment opportunities such as this."