Huge news coming out of Mid Sussex District Council for HHU have learnt that the council seek to make the sensational purchase of the Orchards Shopping Centre in Haywards Heath.
With less money filtering down from central government to ‘wealthier’ local authorities, MSDC are looking to become financially self-sufficient and see the Orchards as a potential source of steady income.
The purchase of the head lease from Friends Provident Life would not come without risks. The main one being low occupancy rates within the centre. The long-term future of Marks and Spencer is always in doubt, it would be a huge loss of rent if they disappear. Also, with Waitrose due to open in Spring 2017 next to the train station, what sort of impact might that have on the town centre and specifically M&S’s food department?
The council are to discuss the potential purchase of the Orchards at their cabinet meeting on Monday 17th October at 16:00.
If they agree to put in a bid, the purchase could be wrapped up before the next meeting of the full district council on November 2nd.
The report on the MSDC website says:
Merging the Council’s interests will bring added value to the investment portfolio, and allow the Council to attract investment funding into the Centre to provide an improved retail and leisure offer and bring new shops and restaurants in to the town.
Our retail advisor has offered an initial opinion as to how the shopping and leisure offer could develop were further investment available. This is consistent with the Town Centre Masterplan that was adopted in 2005 which proposed improvements to the ‘shopping quarter’ (pages 38/39). This should be read in conjunction with the Haywards Heath Neighbourhood Plan which is going through the process to being adopted.
This would be a significant purchase for the Council. We will need a full forecast of the revenue and capital cashflows in financing the purchase and how to structure that over the short, medium and long term.
To that end, we have engaged professional services companies to report on the purchase and the bidding process. We would utilise both these companies to help prepare our bid and assist with the negotiations which would almost certainly be necessary.
This report presents no risk however were the actions recommended to reach fruition, the report would present a full risk log. Some factors to be considered are future rent defaults, loss of key tenants and town centre geographic drift. Mitigation is therefore available for all of these risks but Members should not expect there to be no surprises when self-managing a shopping centre.