British Land has finalised a significant acquisition, purchasing seven retail parks across the UK for £441m from Canadian firm Brookfield Asset Management.
- This strategic move is aimed at strengthening British Land’s position in the retail park segment amidst fluctuating commercial property markets.
- The acquisition will be partially funded through an equity placing expected to raise approximately £300m.
- Chief Executive Simon Carter highlights the benefits of retail parks due to their affordability, adaptability, and accessibility.
- These newly acquired parks boast a 99% occupancy rate, reflecting their robust trading performance.
British Land, a notable entity in the FTSE 100 index, has successfully acquired a portfolio of seven retail parks across the United Kingdom for a sum of £441 million from the Canadian investment company, Brookfield Asset Management. This acquisition underlines British Land’s commitment to expanding its presence within the retail park sector, a segment of the market that has demonstrated resilience despite broader commercial real estate challenges.
The funding for this acquisition is being supported through a proposed equity placement aimed at raising around £300 million. This financial manoeuvre not only underscores confidence in the retail parks’ potential but also reflects a strategic effort to maintain a robust capital structure. The focus on retail parks aligns with British Land’s broader strategy to optimise its property portfolio amid changing retail dynamics.
Simon Carter, the Chief Executive Officer of British Land, articulated the firm’s endorsement of retail parks by referring to the ‘three As’ — affordability, adaptability, and accessibility. These parks typically offer lower rental costs, can be effectively utilised for services such as click-and-collect and last-mile delivery, and are positioned conveniently on town and city outskirts with substantial parking, enhancing their appeal to multi-channel retailers.
Since British Land began investing in retail parks in 2021, these locations have quickly become the outperformers within the UK real estate landscape. According to Carter, ‘Multi-channel retailers have quickly worked out that a retail park is the best physical format for filling online [orders].’ This sentiment is further reinforced by the current high occupancy rates, with the newly acquired sites reported to be 99% occupied and enjoying strong trade, according to current tenants.
While the commercial property sector has faced headwinds over the past two years due to rising interest rates, there are signs of recovery. The acquisition of these retail parks is a testament to British Land’s strategic initiatives and optimism about future rental growth prospects, contrasted against other sectors of commercial property where uncertainty remains.
This acquisition marks a forward-thinking expansion strategy by British Land, highlighting their confidence in the retail park model amidst evolving market conditions.
