Posts from March 2023

The owners of Asda and petrol forecourt group EG Group are reportedly interested in taking charge of fast food chain Subway in a deal worth £8bn. The billionaire Issa brothers already host some Subway restaurants in a number of their petrol stations globally, with 340 forecourts based in the UK. The brothers, whose net worth is reportedly £4.73bn, are not the only potential suitors circling the sandwich chain. Subway previously told shareholders that it was exploring the idea of a sale, and in March it was reported that Wall Street giant Goldman Sachs is also interested in purchasing the chain. Subway, which trades from over 2,000 sites in the UK, was founded in Connecticut in 1965 and has remained family-owned ever since. This comes after it was reported that EG Group saw an increase in revenue of 25% in 2022, despite operating costs increasing amid a tough trading environment. The petrol forecourt group, which operates Euro Garages, Cooplands, Leon, and Cumberland Farms, saw its network expand to some 6,612 sites by the end of 2022. An acquisition of Subway would be one of many recent deals for the Issa brothers, as the two look to rush a merger between their...

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Aviva acquires Southampton retail park in double deal

Aviva Investors has acquired two retail assets in the south of England with the purchase of Hedge End Retail Park in Southampton and an Asda superstore in Hayes, Hillingdon. The asset management arm of Aviva said the deals represent its desire to act as a strategic buyer of real estate assets that can offer strong long-term rental growth in client portfolios. Hedge End Retail Park spans over 100,000 sq ft split between four retail units and is home to a number of established retailers including Currys, Lidl, and Pets At Home. Adjacent to the M27 and M3 road networks, the scheme is supplemented by electric vehicle charging points, solar panels and a green roof. The Hayes Asda store is a purpose-built store which totals more than 85,000 sq ft and is currently let to the supermarket on a 25-year term, set to expire in 2040. The store is a short walk from the Crossrail station at Hayes & Harlington, while the M4 and M25 networks are within a 10 minutes’ drive. James Stevens, head of real estate investments at Aviva Investors, said: “These deals highlight our position as a strategic buyer, and to act with agility in response to repricing...

Deals News

Montagu Evans announces three partner promotions

Montagu Evans has announced its partner promotions for 2023, set to take effect from April 1. Emily Patey, Ally Campbell, and Will Hyslop have all been promoted to the role of partner at the planning and development consultancy. The firm has also made a number of associate and senior surveyor promotions. Patey focuses primarily on the retail sector, particularly in town centres and shopping centres Campbell has experience working on major developments throughout Scotland, delivering planning permission across a number of sectors. Most recently, she has advised on repurposing brownfield assets for various alternative uses including residential, student accommodation, build-to-rent, hotel, office and other commercial uses. Hyslop specialises in the build-to-rent and student accommodation sectors. Rob Bower, managing partner at Montagu Evans, said: “Not only do these promotions – along with this year’s senior lateral hires – mean that we have reached the highest number of Partners in Montagu Evans’ 102-year history, they set the pathway for many other talented individuals who continue to build our partnership legacy.”

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Unlimited fines for landlords who leave retail units in disrepair under new law

Landlords and building owners who do not take care of unused units could see unlimited fines under new laws, granting greater power to local authorities in an effort to regenerate high streets. The new laws come as part of the Conservative Government’s Anti-social Behaviour Action Plan, designed to crack down on various issues which are leading to increased levels of social depravity in vulnerable areas. The Government will consider changes to the guidance for Section 215 notices, which local authorities can use to ensure that building owners and occupiers are looking after their land and units, so that notices can be placed on empty buildings which are “ruining the local amenity”. The upper limit for fines for those who fail to comply with Section 215 notices will also be removed, in the hopes of encouraging building owners to fix buildings which could encourage anti-social behaviour. The Government will also launch the Landlord and Tenant Act Review looking to reform “complex commercial leasing rules” in the hopes of encouraging more investment in UK commercial property. The Government said: “We know that the high street is going through a period of significant change, and that such change brings both risk and opportunity....

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Landsec secures ownership of St David’s and adjacent former Debenhams

Landsec has secured 100% ownership of Cardiff’s St David’s shopping centre, following its purchase of the debt secured against a 50% share of the scheme. The real estate investment trust (REIT) said that leasing momentum at St David’s has been strong, with 36 leases having been signed or placed in solicitors’ hands since March 2022, on average 11% ahead of estimated rental value. Within the last 18 months, the REIT has seen a number of retailers relocate to the scheme from elsewhere in the city, open new stores, or upsize their current units, including brands such as ZARA, Ivy Asia, Gaucho, and Footasylum. Landsec says that occupancy at the scheme increased from 88.1% in March 2021 to 93.1% at the beginning of 2023. The REIT has also purchased the adjacent former Debenhams site for a “minimal sum”. Landsec said the acquisition unlocks an opportunity to deliver its future vision for the site, with the introduction of new public spaces, food and beverage and leisure concepts, and a refreshed brand mix. The REIT’s chief executive, Mark Allan, said Landsec had “invested selectively in new opportunities that offer a materially higher return and responded proactively to the continued high demand amongst occupiers...

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Research reveals Brits opting for lower cost F&B options

Lower priced hospitality venues are seeing strong signs of growth as British consumers’ budgets are squeezed, new data has found. Research from CACI’s Brand Dimensions data platform found that the majority of lower spend food and beverage (F&B) businesses saw growth during 2022, as higher inflation and the cost-of-living crisis puts consumers under pressure. The data platform found that from November 2021 to November 2022, 83% of F&B brands with an average transaction value (ATV) of under £15 saw strong market growth. This included operators Pret a Manger, Greggs, Tortilla, Chopstix, and itsu. Meanwhile for operators with an ATV of £30 or more, only 29% saw an increase in market growth. Other brands with clear campaigns have also done well, with restaurant groups such as McDonalds, Franco Manca, and KFC all creating loyalty programmes which have seen their market share increase by upping both visit frequency and customer spending. CACI’s data also found that pubs and bars saw a growth in market share of 38% in the final quarter of 2022, compared to 2021. However, average spend is down 16%, suggesting customers are moving away from buying their friends rounds of drinks as they look to take control of their...

Insights News

Gail’s signs for Brentford Project

Gail’s is set to join the food and beverage offering at the transformative mixed-use Brentford Project. The artisanal bakery will open a 1,916 sq ft café at 2 West Bradbury Yard, just off the High Street, in early 2024. Set across the ground floor and basement, customers will be able to enjoy Gail’s breads, pastries, cakes and coffees in both indoor and outdoor spaces. The Brentford Project, developed by Ballymore, looks to transform 11.8 acres of space along the southern side the town’s High Street and connect it to the waterfront via pedestrianised yards and lanes. The project is aiming to deliver a mixture of dining, entertainment, shopping, and leisure amenities, as well as 876 new homes and over 5 acres of public realm space and landscaping. Gail’s signing at the project follows the recent news that seasoned restauranteur Sam Harrison will be opening an all-day brasserie concept, Sam’s Waterside, as well as a gourmet deli-cum-grocer, Sam’s Larder. Both concepts are due to open this summer. Richard Pearce, senior development manager at Ballymore, said: “We have a focused approach to selecting brands for The Brentford Project, with each reflecting our vision to enliven the riverside, offering a balance of residential,...

Deals News

Matalan announces new chair and CEO

Matalan has appointed Karl-Heinz Holland and Jo Whitfield CBE as the retailer’s new chair and chief executive respectively. The clothing retailer’s interim CEO Nigel Oddy has concluded his six-month stint in the role. Holland has numerous years of retail and consumer goods experience, having spent 23 years at Lidl including six as CEO, helping lead the brand’s expansion across Europe. He has also worked as CEO of DIA Group, overseeing 5,700 neighbourhood stores across Spain, Argentina, Brazil, and Portugal. Since May 2018, he has held the role of CEO at Takko Fashion, a European discount fashion retailer. From January 2021 until April 2022, he also served as the company’s executive chairman. Whitfield has most recently served as chief executive of the Co-Op’s food division, taking charge of the group’s retail, wholesale, online, and franchise businesses, as well as the Co-Op’s property division. Prior to her roles at the Co-Op, she also held senior leadership positions at Asda, and has worked as head of finance at Matalan between 2002 and 2008. Michael Phelps, partner at Tresidor Investment Management, one of the Matalan’s anchor investors, said: “Anyone close to the retail world will know the experience and focus that both Karl-Heinz and...

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Travelodge writes to local authorities as it seeks 300 sites

Travelodge has made proposals to 220 local authorities to form joint development partnerships as it looks to open 300 hotels. The expansion plan, worth around £3bn, could see the creation of 9,000 jobs, with Travelodge saying the partnerships could “stimulate regeneration”. In 2022, Travelodge opened three sites in partnership with local authorities, with two in London and one in Braintree. The chain is currently working with councils in Rotherham and Colchester to open two hotels. These agreements had funding arrangements which allowed local authorities to make use of existing assets and brownfield sites. Following the construction of the hotels, authorities were able to retain ownership of the hotel and receive rent or sell the site in conjunction with Travelodge. Steve Bennett, Travelodge chief property and development officer, said: “In the current climate, local authorities are under extreme pressure to invest in their economy and support regeneration projects. This is why we are today writing to 220 local authorities to offer our support, as we can make a real difference. “Adding a Travelodge hotel can be a catalyst to attract new businesses, support regeneration, bring vacant buildings back into economic use as well as attracting thousands of new overnight visitors to...

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Tortilla prepares “healthy pipeline” of new openings

Tortilla has a “healthy pipeline” of restaurants as it targets 45 new openings in the next five years. The Mexican restaurant chain has new sites lined up in Milton Keynes, Bracknell, and Belfast, all set to open by the end of the year. In its annual report for 2022, Tortilla said it had a record year of growth, adding 18 sites (net) to its portfolio, bringing its total number of restaurants to 82 by the end of the year. The restaurant said it was taking advantage of the “favourable property rental market”, having added 10 group-operated sites. Tortilla has also been expanding through its franchising programme, opening five university franchise sites through a partnership with Compass Group and a further airport site opened in Bristol in partnership with SSP. In May 2022, Tortilla acquired fellow Mexican restaurant Chilango helping secure its position in London. Five Chilango restaurants were converted to Tortilla branding while the three remaining restaurants were refurbished post-acquisition. The restaurant chain hailed a successful year in terms of revenue, seeing a 20% increase to £57.7m, however, the group saw a net loss after tax of £0.6m, compared to a £1.4m profit in 2021.

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Boots could be sold or floated by US parent

Boots is at risk of being sold or floated on the market as its American parent company comes under pressure to break up the pharmacy giant, This is Money has reported. Walgreens Boots Alliance executive chairman Stefano Pessina and chief executive Rosalind Brewer are being urged by investors and board members to advance plans to refocus the business on the US. It is reported that the group’s international businesses, including Boots, are viewed as a distraction by some. Pessina oversaw the deals that brought Boots and Walgreens together in 2012 and 2014, and is believed to be still in support of breaking up the business. He is however not viewing the matter with as much urgency as some would like. Boots was put on the market in January 2022 for £7 billion, however this was called off in June after no suitable buyers were found. The British chain lost £58 million in the year to August 2021, against a loss of £278 million made during the pandemic, resulting in thousands of jobs being cut. It is likely that City officials would push for Boots to be listed in London, rather than New York, should the business be floated.

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Asda owners rushing to complete £12bn merger

Asda owners, the billionaire Issa brothers, are “racing” to complete a proposed £12bn merger with petrol forecourt group EG Group by the end of April, The Times has reported. The brothers plan to merge the two businesses as part of efforts to relieve some £7bn of debt across their petrol forecourt business. The merger, overseen by the joint owners of both businesses the Issa brothers and TDR Capital, is expected to increase the UK supermarket’s debt significantly, which currently sits at £4.7bn. If completed, the combined business would consist of 581 supermarkets, 700 petrol forecourts and over 100 convenience stores. At least 100 Asda ‘On The Move’ convenience stores have already opened on EG forecourts across the UK. EG Group, which saw its revenue increase by a quarter in 2022, recently announced the sale of 26 American sites for $48m (£40m), following another set of US disposals worth a further $1.5bn (£1.25bn). The former chief executive of Marks & Spencer, Lord Rose, is favourite to lead the combined group. The merger is being advised by Rothschild, Barclays, and JP Morgan. Another proposed Asda merger with a number of Co-Op forecourt sites is currently under scrutiny by the Competition and Markets...

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Esports venue levels up with bricks and mortar debut

Esports concept Level Tap is set to become Liverpool’s first competitive gaming venue after signing at Liverpool ONE. Opening a 6,500 sq ft unit at Hanover Street, Level Tap Liverpool ONE marks the brand’s bricks and mortar debut. Spread over two floors, the mezzanine will enable streamers and Esports teams to broadcast their gameplay to the lower level, which will house a lounge area with a bar and dining tables, as well as a seating area accommodating over 100 viewers. The site will host and broadcast live Esports events from around the world and feature eight console stations, along with two racing simulators and 22 PCs. Level Tap founder Adam Rydings said: “Liverpool is increasingly becoming an huge gaming centre, with a renowned status for games development. Combine this with Liverpool ONE’s reputation as the city’s central hub, home to a community of innovative F&B, retail and competitive socialising outlets, the new Hanover Street unit seemed the obvious choice in which to open our debut venue.” Rob Deacon, senior asset manager at Grosvenor, added: “Level Tap’s exciting new concept is at the forefront of the growing Esports market, combining the gaming world, with a hospitality-led experience, so it makes sense...

Deals News

iFLY Indoor Skydiving debuts in London

iFLY Indoor Skydiving has made its London debut after opening at The O2. The opening of the 4.3m wide wind tunnel marks the leisure brand’s fourth UK location and follows an expansion strategy which has seen the launch of 90 sites worldwide. The indoor skydiving experience will join a number of other leisure operators at the O2, including TOCA Social, Boom Battle Bar, Hollywood Bowl, and Oxygen Freejumping. iFLY’s arrival follows the announcement of strong trading figures at the scheme, which saw an increase in like-for-like sales of 44% at the Entertainment District in January. The O2 also recently welcomed the arrival of J D Wetherspoon’s latest pub The Stargazer. Janine Constantin-Russell, managing director at Icon Outlet at The O2 and the Entertainment District, said: “The O2 is all about experiences and we’re constantly exploring ways to keep our offering exciting, fresh and enticing for visitors to The O2, come day or night, and I believe iFLY does exactly this.”

Deals News

Ocado and former carphone warehouse director joins Dr Martens

Dr Martens has appointed Andrew Harrison as an independent non-executive director. Harrison will join the footwear retailer’s board in May. He is currently a managing partner at investment firm Freston Ventures and a senior independent director at Ocado. Harrison is the owner of the Ocado Smart Platform and joint owner of its online service, where he is also chair of the remuneration committee and the designated non-executive director for engagement with the workforce. Harrison spent over two decades at Carphone Warehouse, having been a member of the early founding team. He served as chief executive and chair and helped develop the company from a small privately owned retailer to a market leader and FTSE constituent. He also led the merger with Dixons in 2014, of whom he was deputy chief executive. On joining the Dr Martens board, Harrison will become a member of the audit, remuneration, and nomination committees. Paul Mason, chairman of Dr Martens, said: “[Harrison] brings a wealth of expertise of consumer facing and technology focused businesses and a highly entrepreneurial mindset. His significant prior experience as both a chief executive and non-executive director of large, listed companies will bolster the board and will be invaluable to the...

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Mike Ashley’s Frasers Group snaps up another shopping centre

Frasers Group has acquired the Overgate shopping centre in Dundee, just one week after purchasing The Mall in Luton for £58m. The Mike Ashley-headed group spent around £30m on the Scottish scheme, although the exact price of the purchase has not been disclosed. The scheme’s former Debenhams store is now expected to become the home of a number of Frasers brands. It is also rumoured that the purchase could see the construction of a cinema at the mall. James France, Frasers Group head of real estate, said: “We’re pleased to have acquired this leading retail destination in Dundee. “Not only do the acquisitions of both Overgate Shopping Centre, and The Mall in Luton, bolster our commitment to the long-term future of physical retail but they further demonstrate our commitment to injecting new life into key shopping destinations across the UK and Europe.” Malcolm Angus, centre manager of Overgate, added: “The retailing diversity and opportunity this brings will ensure Overgate remains an attractive regional shopping centre for both our local and drive time customers.”

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Consumer confidence continues to increase

Consumer confidence rose again in March, following a bounce back in February. GfK’s long-standing Consumer Confidence Index increased by two points in March, following a rise of seven points in February. However, the overall score still sits at a low -36. Consumer opinions of the general economic situation for the last and next 12 months, as well as the major purchase index (how likely consumers are to make expensive purchases), were all up. Consumers’ feelings over their personal economic situation were more pessimistic, while the metric measuring personal financial situations over the previous 12 months was unchanged. The savings index, which is not incorporated into the overall score, increased by two points. Joe Staton, client strategy director at GfK, said: “A small improvement in the overall index score this month masks continuing concerns among consumers about their personal financial situation. This measure best reflects the financial pulse of the nation and it remains weak”. “Just having enough money to live right and pay the bills remains the number one concern for consumers across the UK”, he added.

Insights News

Discount stores drive surprise jump in February retail sales

Retail sales rose by 1.2% in Great Britain in February, a further increase upon the 0.9% rise recorded in January. However, sales were still down 3.5% against the same period in 2022, Office for National Statistics figures revealed. Sales in non-food stores increased by 2.4%, driven by strong sales in discount department stores. Sales volumes (the amount of product sold) in department stores rose by 5.5%, while clothing stores saw an increase of 2.9%. Food sales volumes rose by 0.9%, which can be attributed to a reduction in pub and restaurant spending as the cost-of-living crisis puts a squeeze on consumer budgets. Sales values in retail stores increased by 1.6%, as inflation continues to push up prices. The amount of product bought in retail stores returned to pre-COVID levels (February 2020), however the total amount of spend was 16.8% higher, again a likely symptom of increased inflation. Inflation in February saw a surprise increase to 10.4%, driven by the price of food.

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Wetherspoon takes control of portfolio as profits take a hit