Saudi-based Arbah Capital announces the unique acquisition of the landmark Sauchiehall building in one of the main High streets of the ‘Golden Z’ in the city centre of Glasgow, UK, for approximately £60 ($76) million through a shariah compliant investment structure.
The Sauchiehall building is among the most reputed and prominent retail blocks on Sauchiehall Street in Glasgow’s city center and represents a core long term investment. Glasgow is the 4th largest city in the UK and the city center ranks as the 2nd most important retail district in the UK after the West End, based on CACI ratings. The investment property comprises a mixed use of 309,000 square feet of lower ground, ground and six upper floors, with a multi-storey car park above the property.
The retail complex has major defensive brand anchors such as Primark, TK Maxx, PureGym, Sports Direct, Superdrug and WH Smith. The car park is operated by Q-park, a leading car park operator, which operates over 870,000 parking spaces across Europe. The Asset therefore offers a diversified mix of fashion, fitness, restaurants, healthcare and beauty with parking.
Glasgow has a population of 650,000, a catchment population of 2 million and is the largest city and economy in Scotland. Sauchiehall Street dates back to the 1800s as a historical retail hub and has an annual recorded footfall of 16 million, which attracts the most footfall of the 3 prime retailing streets in Glasgow forming the ‘Golden Z’
Mr. Mahmood Al Kooheji, CEO of Arbah Capital, stated: “The Sauchiehall acquisition focuses on attaining value at a time of uncertainty in the UK, buying a core asset in a prime location at an attractive cap rate.
The investment profiles solid defensive tenants including Primark which occupies the largest retailing unit of the Sauchiehall block. Primark recorded a surge in half-year profits as customers continue to flock to the value retailer, with adjusted half-year operating profit jumping by 25% to £426m, while sales grew 4% to £3.6b. Main tenants such as WH Smith had 8% growth in group revenues, in the 6-month ended February 2019 compared to the previous year. Another major tenant, PureGym which has over 200 branches across UK, eyes further expansion as its revenues grew by 15% in 2018. Such results provide confidence in our investment strategy in finding insightful, well researched, counter cyclical value.”
Mr. Al Kooheji further noted: "Glasgow City Council is planning to invest £115 million into the retail district via The Avenues Concept to transform the retail visitor experience, by offering continuous footways, enhanced street lighting, overall improved landscapes, additional segregated cycling routes, and an ultimate shopping destination. This will serve to enhance property values in Sauchiehall Street.
The Sauchiehall building is located in the street with the highest footfall in the Glasgow city centre, and with selective tenants who target the value market, we expect these to be the most resilient in a downturn. These are the hallmarks of a core asset purchase.
Arbah’s main strategy focuses on acquisition of distinctive assets within excellent locations. The Sauchiehall building represents a core asset in Glasgow’s City Centre which mirrors such an investment strategy in finding exclusive high-quality opportunities. It is these types of investments which will broaden the value creation prospects for our investors within the international market and contribute to our journey into becoming a leading investment bank in the region. The Sauchiehall building was purchased from the US investment firm KKR, and Arbah was advised in transaction management by 90North. This purchase enhances Arbah’s strategic alliances and relationships which further supports its position as an international gateway into the Saudi Arabian and the regional investors market.
Arbah Capital is an Investment firm licensed by the Capital Market Authority in Kingdom of Saudi Arabia and headquartered in Dammam with a paid-up capital of SR220 million.