Avignon Capital sells prime retail asset in Croydon

Avignon Capital has disposed of 75 North End, Croydon, let to retailer Pandora, for £2.7m, reflecting an IRR of 73%.

The unit was acquired as part of a portfolio of three prime retail assets in late 2016 for £6.05m. The three retail units are located on North End, a popular pedestrianised street in Croydon, let to retailers Pandora, Costa Coffee and Carphone Warehouse with additional residential flats above. The assets are centrally located in the town and are set to directly benefit from the Westfield’s and Hammerson’s £1.5bn adjacent redevelopment of the Whitgift Shopping Centre.

The asset management strategy on acquisition was to settle the outstanding rent review with Pandora, which was immediately settled at a 44% increase.

Following the asset management initiative, an offer from Hermes Investment Managers was received for the Pandora unit and Avignon took this opportunity to exit at a premium to valuation, successfully negotiating a sale price at £2.7m.

Phil Walker, Investment Manager at Avignon Capital, said: “Having settled the rent review there are limited asset management upsides for us, so the offer on the Pandora unit presented us with an opportunity to crystallise a profit and bank asset performance that was unlikely to be achieved with a longer hold period.

“However, the Croydon market is rapidly improving due to large regeneration schemes, and we still benefit from exposure in the short term with the two other assets acquired as part of the portfolio last year. We still have several active asset management opportunities over the next 3 years, which include capitalising on rental growth, re-gearing leases and adding value on the residential uppers.

“The sale of 75 North End, Croydon is evidence of Avignon’s ability to yield good returns in a short time frame. We are actively seeking to reinvest this cash in further attractive and well-located assets in the UK.”

Avignon Capital has seen significant additions to its UK portfolio this year, the most recent acquisition was a mixed-use leisure scheme in Southampton for £8.75m.

Gateleys PLC and CWM acted for Avignon Capital during the transaction.