Frasers, the retail owner of brands including Sports Direct and Flannels, has completed the acquisition of two more major UK outlet centres for circa £400 million in a transaction revealed by CoStar News.
Frasers this morning confirmed the acquisition of York Designer Outlet and East Midlands Designer Outlet.
It said this was part of a "vision of creating a compelling brand ecosystem and platform for growth".
It said with an annual footfall of almost 7.8 million visitors across the two outlets, the acquisitions highlight its position as both a landlord and retailer, "supporting global brands’ outlet strategies while delivering strong value and brand choice to UK consumers".
York Designer Outlet comprises 250,000 square feet located just outside the city centre. It is home to 120 UK and international brands and has 4.3 million visitors annually.
East Midlands Designer Outlet comprises 170,000 square feet positioned near the M1 motorway, offers over 65 designer brands and has a footfall of 3.5 million visitors annually.
Michael Murray, chief executive at Frasers Group, said in a statement: “These strategic acquisitions reinforce our vision, leveraging strong partnerships with leading global brands to unlock mutual value - supporting their outlet strategies while driving growth. Today, we own over one-fifth of the UK outlet market and have a clear ambition to grow our share further."
Frasers declined to mention the price or the vendor.
The group has been one of the leading investors buying shopping centres, retail parks and outlet centres in recent years and has bought the two McArthur Glen-managed developments from Aviva Investors for around £400 million.
Frasers Group was advised by CBRE. Morgan Williams advised Aviva.
Frasers completed the acquisition of Swindon Designer Outlet, also managed by McArthur Glen, in December in a major transaction also revealed by CoStar News in October.
That acquisition was understood to have closed for around £144.5 million and a yield in excess of 9%, and topped a massive year of investment in retail bricks and mortar by the group.
At the time, the group said it marked a "meaningful step towards achieving the group’s vision of building the planet’s most admired and compelling brand ecosystem".
Frasers Group started as a small store in Maidenhead in 1982. As the business evolved, 2019 saw the rebrand of retail tycoon Mike Ashley's Sports Direct International to Frasers Group.
Analysts at Jefferies described it as "another significant property deal for Frasers, very much consistent with the group's stated intention, capacity, and strategy. And we continue to believe that the group's ability to both underwrite and improve occupational demand through installation of its own fascias should support value creation."
It added: "Frasers is increasingly viewing its real estate portfolio as a foundational element of the group’s valuation, with the total purchase price of assets now £2 billion. Management has been highly active in what they characterise as a buyer’s market, recently deploying approximately £350 million for high-quality assets in Braehead and Swindon. These shopping centres and retail parks were acquired opportunistically as commercial property firms sought to divest assets.
"Despite the scale of these holdings, the group maintains a non-sentimental approach to property, viewing it as a liquid asset class to be managed through the cycle. From an accounting perspective, the balance sheet significantly understates the portfolio's market value; assets are held at cost and depreciated over a short 15-year term; this results in a relatively diminutive net book value being reflected in the FRAS balance sheet. The strategy of owning the physical footprint provides Frasers with significant operational flexibility, particularly as they refine the optimal size for elevated store formats."