Australian owner Westfield sells to Hermes Real Estate

The popular Royal Victoria Place shopping centre in Tunbridge Wells has a new owner.

With assets of more than £5 billion, the Hermes Real Estate company has taken control from its previous Australia-based owners, Westfield.

It was part of a major property deal announced from Westfield’s head office in Sydney, where Hermes took over three properties at a cost of £159 million.

The deal sees Hermes take full control of the retail assets, which is major confirmation investors still have confidence in British shopping, at least in purpose built malls.

Westfield describes Royal Victoria, and the others in Guildford and Belfast, as “non-core assets”.

In a report, Westfield Group CoCEOs Peter Lowy and Steven Lowy said: “As a result, we have increased our return on equity and long-term earnings growth potential with the additional property management and development income we earn on our reduced capital investment.

“These initiatives provide the group with approximately $9 billion of capital for redeployment into our higher return opportunities. These opportunities include the Group’s share of the $11 billion development pipeline, our recent expansion into the new market of Brazil as well as the investment in major iconic projects at Milan, Italy, and the World Trade Center in New York.”

Steven Lowy said of the three malls: “These assets were originally purchased in 2000, at the time of our initial entry into the UK. Since that time we have refocused our business into iconic assets such as Westfield London and Stratford City and we continue to examine new growth opportunities in the UK. Along with the recent sale of Nottingham, these assets divested today became non-core to our UK portfolio.”

Hermes confirmed it has exchanged on the purchase of Westfield’s 50 per cent stake in Royal Victoria Place, and said the property is in a “key, dominant location”.

Hermes boss Chris Taylor, said: “We have a longstanding relationship with Westfield and are well aligned as strategic investment partners. We have a high regard for Westfield’s commercial approach to retail development in particular. In our opinion they are best in class at what they do.

“The acquisition of these centres comes at the right time in the cycle, and accordingly they offer good long term value. This transaction fits our UK investment strategy which seeks to focus upon direct ownership of properties which we asset manage and acquired through bottom up stock selection. The three centres are each commanding assets within their respective catchments and we believe our strong asset management platform will enable us to deliver significant added value in the long term.”

And he told the FT: “The big advantage to us in owning a whole centre, rather than a few shops on the high street, is that we have control over all of the dominant parts. It means you can change everything from the car-parking to the lighting.

“It is a good time to get into retail and we see it as a core long-term investment, but we are not looking to go overweight on the sector.”

Royal Victoria is 34,000 square metres of shopping space in Tunbridge Wells, labelled the fifth more affluent town in the UK.

There are 81 stores, including Bhs, Fenwick, and Marks and Spencer, with parking for more than 1,700 cars and another 1,250 spaces next door.

It’s estimated some 10.5 million shoppers visit every year.