The developer has exchanged contracts to acquire part of Kirkby town centre from Tesco for £35.8m, reflecting a net initial yield of 9% on the main shopping centre.
Tesco announced at the start of this year that it would not be going ahead with its planned 300,400 sq ft scheme in Knowsley, which included a 140,000 sq ft store and 90 retail units, due to a “disappointing performance”.
Plans for the store and accompanying retail units were approved in 2011 as part of a £200m regeneration of Kirkby town centre, with Tesco funding £1m enhancements to the market and improvements to council buildings.
Kirkby town centre currently comprises 400,000 sq ft of retail and leisure space which is leased to 80 tenants including New Look and Home Bargains.
The sale to St Modwen will now lead to a multi-million pound retail-led regeneration of Kirkby town centre, spearheaded by St Modwen and carried out in partnership with Knowsley Council.
A statement from St Modwen said that the partnership would work on plans to develop and expand the retail centre and complement the existing offer, as well as the provision of a significant new housing scheme on a 65-acre site situated close to the town centre.
St Modwen’s in-house asset team will take over the management of the centre.
St Modwen is the developer behind several projects in Merseyside and the surrounding area, including the Project Jennifer regeneration scheme at Great Homer Street in Liverpool, Skelmersdale town centre and Stonebridge Park in Knowsley, which includes the new 69,000 sq ft depot building for DPD GeoPost.
Steven Knowles, regional director of St Modwen, said: “Our investment in Kirkby town centre will bring about vital regeneration to revive the town centre and with the provision of a large new housing scheme will contribute to the Council’s commitment to provide 450 homes per year for the next 15 years.
“St Modwen continues to make strategic acquisitions and add value through our income producing assets in the region, which in turn supports future employment opportunities in Merseyside. With the upturn in commercial development, the site is a good fit with our existing North West portfolio.”
Cllr Andy Moorhead, leader of Knowsley Council, said: “We were very disappointed that our previous private sector partner was not able to bring forward the retail offer which the residents of Kirkby deserve. We have been working hard to secure a replacement developer who is keen to invest in the town and we look forward to working with St Modwen on their plans to complete the regeneration of Kirkby town centre and greatly enhance the retail offer for the benefit of our residents and businesses.”
Colliers International acted for St Modwen.