One of the UK’s leading designer outlet centres is changing hands as part of the biggest retail property deal for seven years.
LaSalle Investment Management, a subsidiary of the property giant JLL, has agreed to buy Cheshire Oaks and the Swindon Designer Outlet from Nuveen Real Estate for £600 million, representing a yield of 6 per cent. It beat off competition from Bluewater owner Landsec to seal the deal.
Cheshire Oaks is understood to make up the bulk of the purchase price.
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The deal is the largest in the sector since 2014, when Landsec paid £696 million for a 30 per cent stake in the Bluewater shopping centre in Kent at what proved to be the top of the market.
The value of retail property has slumped since as e-commerce and changing consumer tastes have pushed a raft of high street mainstays into restructurings or outright bankruptcies. The scale of the value destruction was underlined last month when Landsec paid just £172 million to pick up an additional 25 per cent stake in Bluewater.
Outlet centres, which pull in shoppers with discounts on popular brands, have proved more resistant to the impact of e-commerce than conventional shopping centres. The line-up of tenants at Cheshire Oaks includes Burberry, Nike and Armani.
Like other outlet centres, Cheshire Oaks leases shops to retailers on short-term leases, typically between three and five years, with the rent being linked to the store’s turnover.
Nuveen Real Estate was advised on the sale by agents from Morgan Williams. Cheshire Oaks is managed by McArthurGlen, which is expected to continue in the same role under LaSalle.
The outlet market is expected to keep growing. McArthurGlen opened a new one in the West Midlands last April, and others are currently being built in the Cotswolds and Lincolnshire.