Council teams up with investor to buy in Weston-Super-Mare
Legal & General has purchased the Sovereign shopping centre in the centre of Weston-Super-Mare, in partnership with North Somerset Council. On completion, the shopping centre will immediately be fully let to North Somerset Council, enabling the council to retain over 60 per centof the shopping centre’s income with no borrowing or expenditure of its own. This will generate a long-term revenue stream for the council, allow for further local investment, and enable North Somerset to curate the town centre more effectively.
The investment is part of a wider strategy for Weston-super-Mare, including converting several shops and car parks in the town centre to residential housing; regenerating the town and creating much-needed housing for local people, whilst focusing retail demand on the Sovereign Centre, to the benefit of the council’s revenue.
The Sovereign shopping centre has been purchased on behalf of Legal & General’s LPI (Limited Price Inflation) Income Property Fund for £21m. The fund will lease the Sovereign Shopping Centre to the council for a term of 35 years, at which point the ownership will revert in full to the local authority. The starting rent in the lease from the council to the fund will be £717,696 a year, rising with inflation and capped at 4 per cent. This means the council will benefit from a surplus rental income of up to £1.1m a year, which can be used both to meet council budgets stretched during austerity, and curate Weston-super-Mare’s retail offer, as the council sees fit. The council will take charge of operating the centre.
The centre extends to 119,084 sq ft, comprising 32 retail units, four kiosks and a food court. The ownership includes a further 10,764 sq ft across six retail units located on High Street. In addition the centre includes an 876 space multi-storey car park, forming a large part of the town’s parking provision.
Pete Gladwell, Head of Public Sector Partnerships at Legal & General, said: “Society is the sum of interrelations, and yet the financial sector has too often been a one way street; sapping wealth into speculation that benefits only a few. Our support of North Somerset Council is a productive investment that supports the original source of society’s wealth – communities across the UK. By partnering with a progressive and proactive council, we can enable the regeneration of necessary retail provision for the area, deliver them sizeable revenue surpluses, and act as a catalyst for their plans for wider regeneration, boosting local jobs, homes, and driving economic growth.”
Mark Robinson, Property Director at Ellandi, added: “We were brought in little over a year ago by the owners to provide strategic and asset level advice on how to maximise value. We’re delighted to have realised a sale on their behalf which met their criteria and timeframe in what has been a challenging market for regional shopping centres. This is our third transaction with a local authority who are such an important partner and counter party when delivering change across the UK.”