Doughty Hanson makes opportunistic return on UK mall

The European private equity firm has sold Old George Mall in Salisbury for £80m having bought it for £60m in January 2009.

Doughty Hanson & Co Real Estate sealed a deal today to sell the Old George Mall in Salisbury, UK, for £80 million (€88 million; $128 million) having bought it for £60 million in January 2009.

The successful exit for its seond fund, Doughty Hanson & Co European Real Estate II, to a pension fund client of Orchard Street Investment Management comes after a period of asset management and capital expenditure at the 137,000 square foot centre, with more than 20 percent of the lettable space being re-leased to chains such as Topshop run by UK retail billionaire, Philip Green.

Doughty Hanson bought the centre at a time of high concern for UK retailers amid reduced consumer spending. Indeed, music, games and DVD chain Zavvi was a tenant at the Old George Mall and plunged into administration. But HMV took over Zavvi’s space, and an expected wave of UK retailing failures never materialised.

Julian Gabriel, the head of Doughty Hanson & Co Real Estate, said: “From an occupational perspective the market has not got any better since we bought the centre in January 2009. We are still seeing retailers with problems –TJ Hughes, Jane Norman and Thorntons for example. But our view on the retail market is that if you pick the right centre with the right dynamics then you can on a defensive basis make money.”

He added: “This deal shows we are able to make opportunistic returns in a lower-leveraged, difficult environment if you have the right asset management expertise to achieve your business plan objectives.”