Bradley Stoke’s Willow Brook shopping centre has changed hands for the second time in just over six years after being acquired by Supermarket Income REIT plc for £84 million.
The centre’s new owner is a FTSE 250 real estate investment trust that aims to provide inflation-protected, long-dated income from grocery property in the UK.
The company says it expects to achieve an initial annual net yield of 5.6 percent on its investment.
The amount paid is less than the £88.8 million that previous owners CBRE Global Investment Partners paid for the asset in 2016, reflecting a general decline in the retail property market that accelerated during the Covid-19 pandemic.
The Willow Brook Centre was originally developed by Spenhill, the regeneration subsidiary of Tesco, but a 50 percent share was acquired by the BP Pension Fund in July 2008, three months before the centre opened, forming an £80 million joint venture.
Centred around a large Tesco Extra store, the site is home to numerous other stores, food outlets and offices, including Boots, Food Warehouse, Pets at Home and Harvester.
The store is an online hub for Tesco, operating 20 home delivery vans and a dedicated Click & Collect facility.
A new McDonald’s restaurant and drive-through opened at the centre last week, to be followed by a Starbucks restaurant and drive-through next month. The centre also has outline planning permission to add two new units onto the existing retail terrace (extending it beyond the Poundstretcher store)
A press release about the acquisition states that the Tesco Extra store at Willow Brook has an unexpired lease term of 14 years, with annual, upwards-only, RPI-linked rent reviews (with a 3.5 percent cap and a 0.0 percent floor).
Ben Green, director of Atrato Capital Limited, the investment adviser to Supermarket Income REIT plc, said:
“We are very pleased to be adding this top trading omnichannel Tesco store to the portfolio together with the complementary essential retailers at this site.”
The company’s portfolio currently comprises 76 supermarket sites across the UK, with 50 directly owned – including the Tesco superstore in Golden Hill, Bristol – and the remainder in joint ventures.
Supermarket Income REIT plc had a market capitalization of £1,279 million at the end of trading on Monday 26th September 2022, the day the deal was announced.
