Vast shopping and leisure centre in heart of Scottish city sold for £111 million

Union Square is home to scores of household names including Apple, H&M, Marks & Spencer and River Island and also houses a Cineworld complex.

Aberdeen’s Union Square shopping centre, one of Scotland’s largest urban malls, has changed hands in a £111 million investment deal, it has been confirmed.

Hammerson, the UK-listed retail ­property giant, said it had sealed an unconditional contract for the sale of the vast 52,000-square-metre shopping and leisure complex to an affiliate of US investor Lone Star Real Estate Fund VI. Completion is expected to occur by the end of the first quarter of 2024. The deal represents an 8 per cent discount to the book value of £121m as of the end of December 2023 and a net initial yield of 11 per cent.

In a brief statement to investors, Hammerson said the money from the sale would further strengthen its balance sheet by reducing net debt and provide additional capacity for reinvestment into the core portfolio. The disposal of Union Square concludes the group’s £500m “non-core” disposal programme, as outlined at the start of 2022. The Aberdeen shopping centre sits next to the city’s railway station and is home to scores of household names such as Apple, H&M, Marks & Spencer and River Island. It houses several cafes and restaurants and a Cineworld complex.

The Aberdeen shopping centre sits next to the city’s railway station and is home to scores of household names. It houses several cafes and restaurants and a Cineworld complex.

The Union Square sale is the latest in a string of prominent Scottish shopping centres to change hands. At the tail end of 2023, The Centre in Livingston was acquired by UK commercial property and investment companies LCP and Evolve Estates, both part of M Core, for an undisclosed sum. It had been reported that previous owner Hines was putting the mall on the market and looking for in the region of £70m.

The retail and leisure destination in the heart of the West Lothian new town encompasses some one million square feet, housing 166 shops, restaurants, cafes and leisure amenities. It is anchored by an Asda store that stretches to more than 100,000 sq ft.

Last August, The Gyle shopping centre on the western outskirts of Edinburgh changed hands in a £40m deal almost 30 years after 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.

In 2022, a bumper £140m deal to acquire Glasgow’s Silverburn was completed, with its new owners promising a transformation of the centre.

Many shopping centres, particularly those located in town and city centres, have had to adapt to changing shopping habits with the rise of online trading and out-of-town developments, frequently offering free parking. Rising costs and pressures from the cost-of-living crisis have added to the challenges facing centre operators and their tenants. Proposals to radically alter the mix of retail and leisure, or even add housing, have been outlined at several key locations.