This £142 million transaction demonstrates continued investor interest in large-scale retail assets like The Centre:mk, even within a challenging retail environment. It provides a market data point for similar properties and reflects the yield expectations for these investments, leading to the independent panel of judges giving it a CoStar Impact Award for Sale of the Year in the South East.
Royal London Asset Management bought 50% of The Centre:mk, in Milton Keynes with a net initial yield of 9.25%. The other 50% is owned by Federated Hermes, which holds it on behalf of the BT Pension Scheme. The net initial yield was 9.25%. The transaction was first revealed by CoStar News.
AustralianSuper had held its 50% stake since 2013, navigating various market cycles and challenges within the retail sector. RLAM's acquisition follow its disposal of other retail assets, suggesting a strategic portfolio rebalancing and a focus on prime, well-performing locations.
About the project:
The property has 1.3 million square feet of retail space spread across two stories, situated on a 13.86-acre plot in the city centre. It includes a multistorey car park with 1,400 parking spaces. Anchor tenants at the location are John Lewis, Next, M&S, H Beauty, River Island, Primark, Boots, JD Sports and TK Maxx.
What the judges said:
"I think The Centre:mk should win Sale/Acquisition of the Year because it’s a stand-out deal that reflects strong investor confidence in large-scale retail assets, even in a challenging market. The £142 million transaction brought Royal London Asset Management on board as a new 50% owner, showcasing strategic portfolio growth and diversification. Despite the tough retail climate, The Centre:mk has maintained an impressive low vacancy rate of just 4.4% with a strong line-up of anchor tenants like John Lewis, M&S, and Primark. This deal highlights not just the resilience of the asset, but also its long-term value as a prime retail destination in the UK, " said Hannah McNamara, the co-founder of agency P-THREE.
"The transfer of a significant partial stake supports underlying fundamentals in prime retail markets, and will aid deal-making for the top 10 to 30 centres in years to come. The deal represents commitment from institutional landlords to invest and support physical retail spaces, and strong pricing level is testament to the proactive asset management undertaken at the scheme," added Edward Bavister, the head of UK retail, logistics and industrial Research, Cushman & Wakefield.
They made it happen:
The buyers' representatives were: Ross Needham, partner, capital markets and Charlie Barke, partner, head of capital markets, both at Knight Frank.
The seller was represented by JLL's Tim Vallance, head of investor services and retail chairman; Georgie Levene, senior surveyor; Phoebe Stewart, graduate surveyor; and Nick Hart, the head of strategic transactions, UK capital markets.