British Land to sell Doncaster and Guiseley retail parks for £98m

British Land is close to selling two retail parks to Ashby Capital for around £98m. Ashby is working with asset manager Quadrant Estates. It is understood that the deal, to buy the 232,000 sq ft Wheatley Shopping Centre in Doncaster and 120,000 sq ft Westside Retail Park in Guiseley, near Leeds, represents a blended yield of circa 7%. Tenants at both parks include Next, TK Maxx, Sports Direct, Asda and Argos. Mismatch in valuations The sale of the two parks appears to be below the price that British Land was originally seeking. This means they may also be being sold at below book value. In June British Land put the Wheatley Centre up for sale as part of a circa £200m package with Elk Mill Retail Park in Oldham and Crownpoint North in Denton, Manchester. It sought a 6.25% yield for the trio. At the same time, British Land marketed Westside Retail Park for £45m at a 5.75% yield. Listed firms with large retail property exposure are trading at material discounts to their net asset values, meaning that the market is valuing their assets at less than the book valuation. When such companies are marketing retail assets for sale, broadly seeking book value, they are subsequently often receiving offers or selling at below the asking price. For instance, last month Hammerson sold two retail parks in Bristol and Fife to Capreon for £164m at a 7% yield, at a discount of around 10% to its December 2017 book value. Reshaping the retail portfolio In its annual results in May, British Land said it is “proactively” reshaping its retail portfolio in challenging market conditions. It made £419m of retail disposals in the year to 31 March. Its retail portfolio value during the year was up 0.3% on the previous year, with growth in estimated recovery value growth offsetting yield expansion. British Land is also one of a number of landlords suffering the brunt of shrinking rent rolls, in the wake of numerous high street casualties. In July, British Land told shareholders that retailer failures and company voluntary arrangements (CVAs) caused a 1.6% drop in total contracted rent since the beginning of April 2017, deepening slightly from a 1% drop recorded in May. To send feedback, e-mail pui-guan.man@egi.co.uk or tweet @PuiGuanM or @estatesgazette