Pearl plucks Islington Council portfolio
Independent occupiers fearful of hikes in £65m shops
David Pearl’s Structadene is to buy a controversial portfolio of council property in London’s Islington for more than £65m.
Pearl is the preferred bidder for the north London portfolio, which comprises more than 222 council-owned commercial units.
Most are let to small retailers across the borough, which has sparked fears about the future of some of the independent traders.
The portfolio generates £2.4m a year and 55% of the income is subject to historic or outstanding rent reviews. Islington Council said the total estimated rental value of the portfolio is more than £3.7m.
The council’s marketing brochure said there are sites with alternative use potential and ‘marriage value’ to unlock residential units that are let under commercial leases.
Local independent traders were outraged at the council’s decision to sell the properties. They fear they will be saddled with huge rent reviews under a new landlord and be forced out to be replaced by chain stores.
In a bid to placate the angry occupiers, the council asked bidders to price each property individually. Occupiers have the opportunity to buy the freehold if their bid matches Pearl’s.
The council said that many tenants had already expressed an interest in buying their premises before the decision to sell was made.
But traders are now arguing they have been asked to raise vast sums of money to buy their properties, far more than what they are worth.
The properties are in some of the borough’s most famous streets, such as Upper Street, Essex Road and Amwell Street. Among the occupiers are Slug & Lettuce, Nando’s, Starbucks and 15 estate agents.
Raymond Mould and Patrick Vaughan’s London & Stamford Investments were among the underbidders. Erinaceous is advising the council.
Pearl completed a similar deal in 1994, when he bought a portfolio on Archway Road, north London.
In March, Pearl bought British Land’s Soho portfolio for more than £26m, reflecting a 3.7% yield.
The 37,500 sq ft portfolio comprises eight freehold properties on Dean Street, Newman Street, Wardour Street, Oxford Street, Poland Street and Great Marlborough Street.