Southside Wandsworth - Ownership and Financing

Ownership and Financing

In the 1990s the centre was owned by Fordgate Wandsworth Limited, owned by Fordgate (a large property company who at the time owned similar developments including the Pallasades centre in Birmingham), and ultimately by property investors Moises and Mendi Gertner. Conscious that the value of the centre was declining, with the departure of both Sainsbury's and Tesco, and declining customer footfall, in 1993 they gained outline planning permission for a 10-screen cinema, expected to cost around £6.5m. The multiplex cinema would later become one of the first branches of Cineworld, whose owner Steve Wiener had long known Mr Gertner.

In 1998 they secured a more detailed and broad ranging planning permission for redevelopment of the entire centre. This included land exchanges with Wandsworth Council (who had a depot on part of the site), replacement of many of the retail tenants, and the development of an eight storey hotel with a restaurant on the ground floor. Removal of the previous 'downmarket' tenants began soon afterwards, with a combination of non renewal of leases, and some tenants being paid to leave.

In 2000, before the main construction work had begun, Fordgate sold the centre to Portfolio Holdings Limited, a UK property company formed in 1993 which had concluded several town centre developments. Their majority shareholder was the Apollo organisation which managed several large property investment funds, based in the USA. They acquired the lease of the Arndale Centre for £40 million with the aim of implementing the planning consents for a multiplex cinema, health club and shopping mall upgrade, with some modifications to the detailing, particularly to the mall entrances and lighting. Their financing came from German private bank BHF Bank (who provided borrowing facilities of £55m for the acquisition and redevelopment of the centre), plus their own resources and those of their American partners Apollo Real Estate.

Portfolio used a limited partnership, Wandsworth LP, as a specific investment vehicle for the development. Wandsworth LP was effectively a joint venture between Portfolio Holdings, Apollo Real Estate Advisors and Deutsche Bank Real Estate's Global Opportunities Fund, and was used in order to meet the preference of their American shareholders for tax transparency.

Between 2000 and 2004 Wandsworth LP implemented a £75m investment in the refurbishment of the centre. The first phase was the construction of a health club on the Buckhold Road frontage (let to Virgin Active), and securing conditional agreement for a 35,000 sq ft branch of Waitrose (who signed the lease in December 2001 as the first 'new' anchor tenant, and opened in 2004). They obtained a revised planning permission in 2002 for a larger and more extensive redevelopment than the previous Fordgate Wandsworth project, which included a 36,000 sq ft branch of Primark, an increase in the size of the cinema to 16 screens, as well as the demolition and reconstruction of the southern multistorey car park, and a comprehensive refurbishment of the interior of the centre (aside from Arndale Walk, which was to be demolished in a subsequent phase), and implemented the majority of these plans over the following two years.

On 11 August 2005, Wandsworth LP sold to the centre to Metro Shopping Fund for £188 million. The Metro Shopping Fund is a 50:50 joint venture between Land Securities and Delancey, formed in 2004, which at the time also owned several other London shopping centres including the nearby ShopStop at Clapham Junction. Metro Shopping Fund continued the development of the centre, though at a slower pace, demolishing the eastern side of the old centre (facing Garratt Lane), creating a series of double-height units on the main mall (using previously derelict rooftop recreation areas) and bringing in further anchor tenants TK Maxx and New Look. Construction of a replacement frontage along Garratt Lane was put on hold, due to the economic recession, and plans were scaled down with a revised permission obtained for a smaller development that did not have flats above the retail units. On 9 December 2011, Metro Shopping Fund secured a £140 million financing facility to support the development of the first phases of the extension along Garratt Lane, from Bayerische Landesbank and Deutsche Pfandbriefbank.