ICSC: International Council of Shopping Centers

Mills, Ivanhoe Cambridge to buy Scotland's largest retail center for $524.2 million

The Mills Corp. and Ivanhoe Cambridge agreed to buy St. Enoch Centre, Glasgow, Scotland, for $524.2 million from German real estate firm Deka Immobilien. The parties expect to close the deal in January.

Under the 50-50 venture, Mills will manage the property and get development, leasing and management fees. This is not the first venture between Arlington, Va.–based Mills and Montréal-based Ivanhoe Cambridge. Most recently, the two joined up to develop Vaughan Mills, outside Toronto.

St. Enoch, Scotland's largest center, contains about 80 stores and is 98.6 percent occupied. Department stores Debenhams and BHS are among its anchors, and its roughly 700,000 square feet of gross leasable area comprises a mid-price merchandise mix.

Mills said it has identified some expansion and development opportunities at St. Enoch, including an already approved 50,000-square-foot expansion. By re-leasing vacant and temporary tenant space, Mills says it expects to achieve first-year net operating income of $32.2 million.

This is Mills' first purchase of an existing center outside the United States but not its first foreign venture. Last summer Mills opened Madrid Xanadú, a 1.4 million-square-foot retail-entertainment complex outside Spain's capital city. And just last month the city of Rome chose Mills as lead developer on a contemporary retail, entertainment and cultural center at the Mercati Generali site. Mills will continue to build its franchise in select European markets, CEO Laurence Siegel said in a prepared statement.