Investment money is chasing the apparent value in Scotland’s retail warehousing, compared to other asset classes, with £52.6 million transacted to year date and a further £259.4 million under offer, according to international real estate advisor Savills.
The sector is attracting interest from UK institutions and overseas buyers. Key deals include: Columbia Threadneedle Investments acquiring Gala Water Retail Park in Galashiels from M&G Investments for £10.22 million (NIY 7%) (Savills advising M&G); 90North paying £57 million (NIY 6.21%) for Glasgow’s Great Western Retail Park from KKR; Simon Aurora acquiring Linlithgow Retail Park from Lothbury Investment Management for £9.4m (7.35% NIY); and Henry Boot selling Livingston Retail Park at £7.3m (Savills advising Henry Boot).
Rod Leslie, director in the investment team at Savills Scotland, says: “A widespread desire for industrial investments has seen the market somewhat overlook retail warehousing which is currently trading at c.150 bps cheaper than it was 10 years ago. As a result this spread of yields is attracting investors looking to buy well let assets, in key locations where rents have been re-based. Appetite for such investments has significantly increased in 2017 and we are now seeing assets and increased volume in trade as investors look to snap up retail warehousing at a relative discount while they still can.”
On behalf of Pears Property, Savills has launched Wellington Circle, a prime retail warehouse investment in Aberdeen where tenants include Ikea, Makro, PureGym and Starbucks. Generating a net income of £1.45 million per annum, offers for the investment are invited in excess of £21.5 million, reflecting a net initial yield of 6.33%.
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