Capital & Regional completes sale of Buttermarket Centre

Capital & Regional announced on Monday that it completed the sale of the Buttermarket Centre, Ipswich to the National Grid Pension Fund for a price of £54.7m, at an equivalent yield of 5.9%.

The London-listed firm said it expected to make an internal rate of return of over 40% on the total investment.

It held the Buttermarket Centre in a 50:50 joint venture with Drum Property Group.

The initial consideration for the whole joint venture was £19.6m after repayment of associated debt of £19.9m.

A further consideration of £8.0m remained contingent on the completion of the letting programme for the centre, which the company was confident would be achieved.

The net proceeds to Capital & Regional were expected to be £13.5m, of which £9.8m was received on completion.

Capital & Regional said the investment in the joint venture had a carrying value of £13.6 million in the group’s accounts on 30 June 2016, and it will recycle the proceeds from the sale into new investment opportunities.

Buttermarket Ipswich acquired the Buttermarket Centre in 2015 for £9.6m, when it was 43% occupied by area, and invested £25.1m of capital to transform the scheme from a “tired” shopping centre into a “vibrant” retail and leisure destination, the board explained.

It said a number of “complicated asset management challenges” were overcome in the process and the 235,000 sq ft centre was now 89% let, anchored by a 12 screen Empire cinema and family entertainment centre, relocated and upsized TK Maxx and New Look units, a 20,000 sq ft Pure Gym, and nine new restaurant units now occupied by Coast to Coast, Byron, Wagamama, Prezzo and Cosy Club.

“The completion of such a complex and transformational project in just a two year period is a great showcase for our particular expertise and asset management skills, and the IRR we have delivered is a strong testament to the success of the investment,” said chief executive Hugh Scott-Barrett.

“Following on from the successful sale of The Mall, Camberley, this disposal provides us with significant capital to reinvest into higher yielding opportunities.”