LONDON, UK: Capital & Regional, a UK focused REIT that owns and manages a portfolio of in-town community shopping centres, has announced that it has agreed to buy The Gyle Shopping Centre in Edinburgh for £40 million, excluding acquisition costs.

The Gyle Shopping Centre is a dual supermarket anchored community centre located in the south west of Edinburgh, Scotland’s capital city. The centre has a gross lettable area of 279,000 sq ft and comprises 54 retail units, two office buildings and 2,300 car parking spaces. The centre is anchored by Marks & Spencer and Morrisons, and has other tenants such as Next, Boots, WHSmith and JD Sports. The centre attracts over 7 million visitors per year and serves a catchment of over 1.3 million people.

The acquisition is in line with Capital & Regional’s strategy of seeking selective opportunities to grow the company and utilise its management expertise in delivering its community centre strategy. The company said that the acquisition will be accretive to income from day one, as the agreed price represents a significant discount to the replacement cost and a net initial yield of 8.25%. The company also said that it has identified several asset management opportunities to create value, such as improving the tenant mix, occupancy and income, and enhancing the centre’s appeal to the growing and affluent catchment.

The acquisition will be financed through existing funds held by the company, a new debt facility of £16 million from Morgan Stanley at a fixed cost of 6.5% for five years, and an equity raise of approximately £25 million through a fully underwritten Open Offer by the company’s majority shareholder, Growthpoint.

Lawrence Hutchings, Chief Executive Officer of Capital & Regional, commented: “The acquisition of The Gyle Shopping Centre marks the first step towards rescaling our business and fully leveraging our proven skills and management expertise. This acquisition allows us to capitalise on an opportunity to add an established community centre in Scotland’s capital city to our portfolio, in a transaction that will be part-funded by an equity raise available to all existing shareholders and fully underwritten by our majority shareholder, Growthpoint.”

The acquisition is expected to complete in October 2023.