London-based investor manager Praxis Real Estate has picked up three further shopping centre asset management mandates on behalf of councils in recent months, adding in excess of 675,000 sq ft of third-party retail to its existing portfolio of 12 shopping centres.
One of the UK’s largest privately-owned property companies, Praxis was established as a proprietary investor before pivoting towards third-party asset management in 2020 as part of a drive to expand its £1Bn plus of existing assets under management.
Following on from its first appointment at the end of 2020 when Middlesbrough Council took over the 250,000 sq ft Captain Cook Square shopping centre, Praxis has won two further asset management briefs from the local authority owners of assets in Gloucestershire and Devon and advised Middlesbrough Council on a further acquisition which it has now concluded.
Praxis has been appointed to manage the 110,000 sq ft King’s Chase shopping centre in Kingswood after South Gloucestershire acquired the property for £10M in 2021, as part of plans to regenerate the town center and high street.
The company also acted for Middlesbrough Council in the acquisition of Cleveland Centre shopping centre, consolidating the council’s ownership in the town. Praxis is working closely with Middlesbrough to bring forward its ambitious strategic regeneration plans.
In November, North Devon Council acquired Green Lanes shopping centre in Barnstaple with Praxis advising on the deal and subsequently picking up the management mandate. At the time of the purchase a spokesperson for the council said the 140,000 sq ft acquisition was part of plans to create “a sustainable core of high-quality retail at the heart of the town and encourage diversification by regenerating and repurposing what are now struggling secondary locations.”
Oliver Sugaré at Praxis, said:
“We won each of these mandates based on our credentials and track record of delivering investment outperformance. Our council partners seem to appreciate our no-nonsense approach and clear, pragmatic advice which in many cases contrasts starkly with some of the bewildering propositions that have been put to them by others. For all three mandates, we are delivering the full Praxis service, which includes asset and property management through facilities management, retail leasing, and legal support.
“Each of the three councils acquired their shopping centres based on an ambitious town vision and our remit is help facilitate that vision and inject commercial rigour into the execution and delivery. Our first task is to stabilize the asset and the cash flow and get the asset and property management under control, because it is astounding how many of the assets we inherit or advise on are mismanaged or undermanaged.
We recently advised a Council on a potential acquisition where they had been told by another adviser that the centre needed £160M investing to render it viable. We advised the Council that not only was the scheme essentially fit for purpose in its current guise, but it didn’t need a penny spending on it just a complete overhaul of the asset and property management operation. This is a familiar story. A lot of councils in the UK have been misled by charlatan advisers who invoke fantastical CGIs with eye-watering budgets, but these proposals are frequently disconnected from all commercial reality. Our job is to ensure the councils meet their regeneration objectives and look good doing it, and that usually involves revisiting the entire strategy to figure out what is realistic and deliverable. There is no question that some town centre regeneration plans require significant capital expenditure, in which case our task is to deliver value for money for our clients. However, all that is often lacking is effective asset management and we are invariably able to generate results without having to spend a lot of money, if any
Praxis already owns a portfolio of 12 shopping centres as a proprietary investor, alongside the three management mandates. The company is engaged in discussions with seven other Local Authorities with shopping centre assets and is advising four Councils on potential acquisitions.
Sugaré continued: “Shopping centres represent a significant minority of our wider property portfolio, and as both a retail specialist and generalist investor developer in the regions, we have a unique perspective on retail assets where there is a repurposing or redevelopment angle. We have successfully invested in virtually every asset class, including offices, industrial, residential and student housing, and we bring all that experience, and those skill sets to bear.
Praxis’s asset management division is headed up by Director, James Hewitt, who said: “We’re a month into the North Devon and Gloucestershire appointments, and we are already implementing changes that will have a material impact on the performance of the assets. The longer-term vision for each scheme is evolving rapidly and we are working on some exciting ideas on what can be achieved.
“In Green Lanes there’s a former British Home Store unit that has sat vacant since the brand went bust. We are looking to do something very different, which involves introducing community and educational type uses.
“In Bristol, the scheme is very resilient and has a bright future. Kings Chase is a scheme that we’ve had the benefit of analysing as potential proprietary investors over four or five years, so we already know it well. There are certainly elements of the scheme that are at the end of their economic life, and again, it’s going to be about re-imagining that space by introducing complementary, synergistic community uses that will genuinely drive footfall and revenue.
“We look to introduce new community uses into former retail space that is functionally obsolete, usually because of a systemic supply and demand imbalance. But the key consideration is identifying the right uses for that space and correcting the oversupply, which often means reducing the amount of retail. For far too long, landlords have defaulted to generic cinema, leisure, or residential uses, but there is a reason that so few of these proposals have come to fruition; they look very pretty on paper but, in reality, don’t stack up.
“The fundamental issue with many UK shopping centres is that they are simply too big, with too much retail space and a diminishing pool of viable retailers. Our remit is to preserve what is viable and promote alternative uses that will reinvigorate and reimagine the schemes to ensure their long-term viability, both as community hubs and accretive financial investments.”
