Saudi-based Arbah Capital has acquired a landmark retail property, Sauchiehall Building, in Glasgow, UK, for £60 ($76) million through a shariah compliant investment structure.
The retail property, located in one of the main High streets of the ‘Golden Z’ in the city centre of Glasgow, comprises a mixed use of 309,000 square feet of lower ground, ground and six upper floors, with a multi-storey car park above the property.
The retail complex has major defensive brand anchors such as Primark, TK Maxx, PureGym, Sports Direct, Superdrug and WH Smith.
Mr. Mahmood Al Kooheji, CEO of Arbah Capital, stated: “The Sauchiehall acquisition focuses on attaining value at a time of uncertainty in the UK, buying a core asset in a prime location at an attractive cap rate.
The investment profiles solid defensive tenants including Primark which occupies the largest retailing unit of the Sauchiehall block. Primark recorded a surge in half-year profits as customers continue to flock to the value retailer, with adjusted half-year operating profit jumping by 25% to £426m, while sales grew 4% to £3.6b. Main tenants such as WH Smith had 8% growth in group revenues, in the 6-month ended February 2019 compared to the previous year. Another major tenant, PureGym which has over 200 branches across UK, eyes further expansion as its revenues grew by 15% in 2018. Such results provide confidence in our investment strategy in finding insightful, well researched, counter cyclical value.”
Mr. Al Kooheji further noted: “Glasgow City Council is planning to invest £115 million into the retail district via The Avenues Concept to transform the retail visitor experience, by offering continuous footways, enhanced street lighting, overall improved landscapes, additional segregated cycling routes, and an ultimate shopping destination. This will serve to enhance property values in Sauchiehall Street.
The Sauchiehall building is located in the street with the highest footfall in the Glasgow city centre, and with selective tenants who target the value market, we expect these to be the most resilient in a downturn. These are the hallmarks of a core asset purchase.