The two assets made up 27% of the Company's retail property portfolio by value as of November 2017. On average, the combined consideration marks a 4% discount to the latest book value of the assets.
Firstly, St. Modwen has exchanged contracts for the disposal of the 220,000 sq ft Longbridge Shopping Park in Birmingham to Columbia Threadneedle Investments on behalf of Zurich Assurance Limited for a cash consideration of £53.6 million, reflecting a 6.0% initial yield. The Shopping Park includes a 150,000 sq ft Marks & Spencer, with further units let to a range of occupiers, including Smyths Toys, Boots, Poundland, Mountain Warehouse, Holland & Barrett, Carphone Warehouse and Specsavers. The Shopping Park forms part of St. Modwen's successful £1bn Longbridge regeneration project. This flagship long-term scheme is currently approximately 50% developed, and the Company will now focus on bringing forward the significant development opportunities that remain on the 468-acre site.
Secondly, the Company has exchanged contracts for the disposal of Wembley Central in London, which comprises an 118,000 sq ft shopping centre and 86-bed Travelodge.
Mark Allan, Chief Executive, St. Modwen, said:
“These disposals are in line with our strategic objective to increase our portfolio focus on assets with better structural growth characteristics and our intention to sell £100-150 million of retail and small assets during 2018. We plan to use the capital we release via these sales to bring forward future phases of Longbridge and accelerate the delivery of our 7.5 million sq ft near-term industrial/logistics development pipeline. We intend to retain the majority of the latter for the longer term, which with a yield on incremental capex of circa 9% will deliver a marked income pick-up relative to the average yield on these disposals.”