OLDHAM has scooped a £40m property investment as the town recovers from last summer’s riots. And London-based investors say it is set for further investment opportunities.
Kevin McGrath’s REIT Asset Management has bought the 16,723-sq m Town Square shopping centre in Oldham. It is believed to have paid Scottish Amicable, represented by Prudential, just under £40m for the centre. The yield is close to 7.75 percent.
The move is McGrath’s second big investment in the town. In May last year, REIT swooped on Oldham’s Spindles shopping centre, buying it as part of a £134.5m deal. The 24,600-sq m Spindles centre is anchored by Debenhams, JJB Sports, Next and Superdrug and dominates Oldham town centre.
McGrath said that last summer’s riots did not deter his company from investing and promises improvements to the town centre.
‘‘We have deliberately targeted Oldham and bought properties in the town because it has a good catchment population, and a strong town centre,’’ he said. ‘‘Our experience since we bought The Spindles has been very positive and we’ve had good feedback from retailers and from shoppers.
‘‘Clearly, during the two weeks of the riots, things weren’t so good. But we took a view that the riots were short-term and were not a purely Oldham problem. It didn’t worry us as investors. Since we already owned half of the town centre, we thought we should try and buy the other half. We liked it so much. We know Oldham has a lot going for it and that retailers want to move in.’’
Plans
The Town Square centre has planning permission for a massive 15,000-sq m extension, which could bring a new department store to the town. But McGrath said he did not expect to build it immediately: ‘‘We have plans for both the Spindles and Town Square. Putting the two centres together will make them very strong. We are already talking to retailers about taking new shops.
‘‘We have also put a lot of money into promoting the town and raising Oldham’s shopping profile and that has begun to pay off. Both Spindles and Town Square had a very good Christmas.’’
Stephen Hamer, investment director at Lambert Smith Hampton, said: ‘‘Anybody who is close to the ground understands that last summer’s riots in Oldham did not affect the town centre. It has a good strong town centre shopping core. And it is attracting investors.’’
An independent report into the causes of the summer riots was published in December. Police, council bosses and community leaders are now considering the report’s 120 recommendations. REIT recently bought six shopping centres from Land Securities for £250m and finalised the £22.3m purchase of Accrington Arndale centre. The deals further McGrath’s ambitions to build a £1bn property investment portfolio.
REIT’s move into retail property is part of a national trend. Until recently, investors thought that shops represented a bad buy. But continued high consumer spending is persuading them otherwise. Northern shops are especially popular.
Last week Altrincham-based property company HMG acquired a 2,320-sq m mixed retail scheme at Northwich, Cheshire, for £3.83m.
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