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Lone Star Funds is looking to make a return of about £64M on the sale of Aberdeen's Union Square, putting the 550K SF shopping and leisure scheme on the market for around £175M less than three years after buying it for £111M.
The U.S. private equity investor has appointed Knight Frank to sell the centre, with the proposed price representing a 58% premium to the March 2024 acquisition price paid to Hammerson.
The increase comes after Lone Star focused on leasing, tenant investment and income growth rather than pursuing a major redevelopment, the company said. Net income has risen 22% over the past 36 months, according to Knight Frank, while a series of new lettings and store expansions has strengthened the occupier lineup.
Marks & Spencer has moved into a new 100K SF flagship store on the retail park, while TK Maxx and Apple have expanded. Recent arrivals include Ikea, Mango, Schuh, Victoria's Secret, Hobbs, The Entertainer and Wingstop. JD and Next are also among the retail park's occupiers, while the enclosed mall includes Zara, H&M and Cineworld.
“Union Square is a huge success story and its recent lettings, substantial tenant investment, rental trajectory and strong sustainability credentials are exactly what you want to see from a thriving retail asset,” Knight Frank Head of Capital Markets Charlie Barke said in a statement.
Union Square opened in October 2009 after being developed by Hammerson on a former railway goods yard beside Aberdeen station.
The scheme was conceived as a retail, leisure and transport-led destination rather than simply a shopping centre, and alongside retail, the development also included a 10-screen cinema, restaurants, a 200-room hotel and 1,700 parking spaces.
Hammerson subsequently refreshed the centre and expanded its occupier base, but Union Square eventually became part of the company's strategy to reduce exposure to regional retail.
The asset was marketed in 2022 at a guide price of about £150M, but a proposed transaction with Brookfield at around £140M did not complete, and Lone Star eventually bought the centre for £111M in March 2024 at a 12% yield.
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