Surrey council buys shopping centre for £86m

Capital & Regional has sold The Mall Camberley to Surrey Heath Borough Council for £86m – a net initial yield of 5.9%. Plans for a £4.5m refurbishment of the shopping centre had been approved by councillors in May. However, the council later approached the developer about purchasing the shopping centre, Capital & Regional said. Surrey Heath will fund the purchase through local government finance including loans from the Public Works Loans Board, who loaned Spelthorne Council money to buy BP’s Sunbury office campus on a leaseback deal earlier this year. From 29 Sep: Spelthorne Council makes £350m BP Sunbury campus buy ‘Council investment into shopping centres in 2016’ Chief executive Hugh Scott-Barrett said: “The disposal of The Mall Camberley, which originated from an unsolicited approach from Surrey Heath Borough Council, will put us in a strong position to recycle capital for growth.” The 390,000 sq ft centre has 152 units with tenants including House of Fraser, Topshop, TK Maxx, Boots and Primark. Karen Whelan, chief executive of Surrey Heath Borough Council said: “These investments will help secure long term financial stability for the council as government funding for local authorities is reduced.” Some £45.2m of proceeds from the sale, which is expected to complete in the middle of November, will be used by Capital & Regional to repay debt secured on the property as part of The Mall’s loan facility. The balance will be held for reinvestment in Capital & Regional’s shopping centre business, including the ongoing capex programme and acquisitions. The Mall Camberley contributed approximately £1.8m to Capital & Regional’s profit for the six months ended 30 June 2016.  The valuation at 30 June 2016 was £88.5m, representing a net initial yield of 6.15%. Montagu Evans, and legal advisers Addleshaw Goddard, advised Surrey Heath on the deal. • To send feedback, e-mail louisa.clarence-smith@estatesgazette.com or tweet @LouisaClarence or @estatesgazette