St Modwen's Connah's Quay scheme

Pension fund buys St Modwen supermarket for £11.8m

South Yorkshire Pensions Authority will forward fund St Modwen's £15m retail development anchored by a 52,000 sq ft Morrison's food store at Connah's Quay in North Wales.

The six-acre scheme includes 20,000 sq ft of additional retail space and a 325-space car park.

SYPA will buy the freehold of the entire site and grant a leaseback of the 20,000 sq ft of retail space to St Modwen. The developer is currently letting the retail space to a variety of local and national retailers and will manage the centre once it is built.

Paul Batho, senior development manager of St Modwen, said: "There are very few developments of this nature starting on site at the moment and this, coupled with the dearth of activity in the property investment market, represents a huge vote of confidence in both the Deeside area of North Wales and St Modwen.

"A number of retailers have already agreed terms for the scheme and we hope to be able to make a further announcement on the tenant line up shortly. The smaller units will be occupied by a mix of retailers both local and national, some of which were tenants in the original 1970s centre.

"Retailers see a fantastic opportunity to trade in the fully modern shopping environment that we are creating whilst benefitting from the footfall generated by an anchor foodstore such as Morrisons."

Rob Millington, head of investment at Cheetham & Mortimer, advising St Modwen, said: "Despite tough conditions, this deal proves to a skeptical market that development funding is available for high calibre investments, although the defensive quality of the supermarket sector and the substantial nature of the developer were key drivers in delivering a satisfactory outcome."

Demolition of the original centre started in June 2009. Construction of the new development is expected to begin by the end of the summer and will last for one year.

Standard Life Investments and Whitaker Horton advised South Yorkshire Pensions Authority.

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