City council to acquire Liverpool Central Shopping Centre in possible £17m deal

Centre also serves as the main entrance to Central Station and comprises 21 retail units generating an annual income of £860,000 a year and the council will borrow to fund the deal. Tony McDonough reports

Liverpool Central Shopping Centre
Liverpool Central Shopping Centre enjoys a footfall of around 16m people a year

 

Liverpool City Council is acquiring Liverpool Central Shopping Centre in a deal that could be worth more than £17m.

It will purchase the lease from Aviva Life & Pensions UK as part of a programme to stimulate the wider redevelopment of the nearby Knowledge Quarter Gateway zone which includes the Circus Liverpool development and from Lime Street to Bold Street.

The underlease for the centre, which contains 21 retail units covering more than 50,000 sq ft, will earn the council £4.3m over the first five years – meaning it will make a profit over the loan repayments to facilitate the purchase.

The value of the deal is undisclosed with the council citing commercial confidentiality. However, average yields for UK shopping centres are 4.5% to 5%. The yield is the annual rental income expressed as a percentage of the capital value.

If the annual rental income of £860,000 from the centre represented 5% of the capital value of Liverpool Central then the deal would be worth just over £17m.

A report to the city council’s cabinet on Friday is recommending the acquisition of the centre’s 114-year lease and for the council to simultaneously enter into a 20-year underlease with Liverpool CSC.

Buying the centre is also part of the council’s Invest to Earn strategy, which uses the council’s ability to borrow at low rates to stimulate profit that is then reinvested in services, and follows similar deals such as the purchase of the Cunard Building which now generates a rental income of £2m a year.

Liverpool Central Shopping Centre
Entrance to Liverpool Central Shopping Centre

 

The shopping centre boasts huge footfall as it doubles as the main entrance to Liverpool Central Station – one of the busiest rail stations in the UK with passenger numbers reaching 16m per year.

Mayor of Liverpool Joe Anderson said: “The purchase of Central Shopping centre is too good an opportunity to pass up.

“It enables us to acquire a strategic site in a prime city centre location which we have plans to regenerate and the investment makes a profit for the council to reinvest in our services.

“The beauty of this deal also means that plans for Lime Street, Lewis’s Building, Circus Liverpool and Central Shopping Centre are now all inter-connected.”

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