Landmark Edinburgh shopping centre anchored by M&S changes hands in £40 million deal

The Gyle shopping centre in Edinburgh has changed hands in a £40 million deal almost 30 years since it opened its doors to the public.

New owner Capital & Regional, which is structured as a stock market-listed real estate investment trust (REIT), said the centre would require “minimal immediate capital expenditure” though it pointed to a “clear medium-term opportunity for significant value add initiatives”. In 2021, plans were outlined for a radical facelift for the mall, which lies on a 50-acre site some six miles west of Edinburgh city centre, creating a major “urban quarter”. It is not clear how these proposals could be affected by the change of ownership.

The £40m price tag pales in comparison with other recent shopping centre transactions. Last year, a bumper £140m deal to acquire Glasgow’s Silverburn was completed, with its new owners promising a transformation of the mall. Edinburgh’s new St James Quarter cost in the region of £1 billion to develop. Capital & Regional said The Gyle was being acquired at a net initial yield of just over 13.5 per cent, which is expected to rebase to around 12 per cent.

Lawrence Hutchings, chief executive of Capital & Regional, said: “This acquisition allows us to capitalise on an opportunity to add an established dual supermarket anchored community centre in Scotland’s capital city to our portfolio. We have also identified a number of asset management opportunities to create value including refining the tenant mix, a renewed focus on leasing to improve occupancy and income, whilst enhancing the centre’s appeal to the growing and affluent catchment in south western Edinburgh.”

The vast Gyle shopping centre to the west of Edinburgh city centre opened its doors to the public in 1993.

Capital & Regional said the centre was complementary to the company’s existing portfolio and provided an opportunity for the firm to apply its “management capability and experience” to improve the retail and services offering. The Gyle - opened in October 1993 - comprises 88 retail units, though several are currently unoccupied, and is anchored by a vast Marks & Spencer store and a Morrisons supermarket. With a 2022 footfall total of 8.6 million, the mall has 2,800 car parking spaces, an upper level food court and is served by the tram system which links the airport to the city centre.

Capital & Regional said it had entered into an acquisition agreement with the seller, Gyle Shopping Centre Trustee Limited, to purchase the site for a total of £40m, excluding acquisition costs. The deal is being funded by existing funds held by the company, a £16m debt facility, a share offer to raise proceeds of about £23.4m (net of fees, costs and expenses), and the group’s existing cash resources. The acquisition is expected to deliver “significant earnings enhancement” in the first full year of ownership.

The retail space at The Gyle is let at an annual gross rent of about £6.8m and has a current annual net rental income of £5.77m. The headline occupancy is currently 94 per cent, by floor area, with average rent of £33 per square foot excluding the two anchor stores.