Scotch Corner Outlet Village targets £25.5m via stock market funding

The owners of the largely pre-let designer retail destination are gearing up to float on the Aquis Stock Exchange Growth Market, as they look to raise the capital needed to finish delivering the scheme.

The company, which is developing the major retail and leisure destination at the well-known Scotch Corner junction on the border of North Yorkshire and the North East of England, plans to list on the Aquis Real Asset Market segment.

The fundraising will target both institutional investors and retail investors, with support from Oberon Capital and RetailBook.

If all goes to plan, the IPO is expected to complete next month.

Scotch Corner is seeking to raise the £25.5m through a new share issue and, in addition, the scheme’s sponsor will contribute the development land and business into the company in exchange for £16.5m in shares – a figure slightly below the independently assessed land value by Savills.

Once listed, shares are expected to be available on major retail investment platforms including Hargreaves Lansdown and Interactive Investor.

The fresh capital will primarily be used to reduce existing debt and push ahead with construction of phase one: a 182,500 sq ft designer outlet village that is already around 66% pre-let.

The company also intends to acquire land for phase two.

Further funding for phase one, which once complete is forecast to have a GDV of £169m, is expected to come via senior and mezzanine debt facilities arranged alongside the listing.

Originally due to open in 2021, phase one of the 100-acre site is now targeting a completion date of spring 2027. Phase one will comprise 73 stores set over 50 acres of the site.

The development sits at the junction of the A1(M) and A66, known as the ‘crossroads of the North, which has around 29 million vehicles passing through each year, making it one of the UK’s busiest strategic road intersections.

Within a 60-minute drive time, the scheme can reach around 4.5m residents – around 5% above the UK outlet average.

That figure rises to 9.6m within 90 minutes, positioning the project as one of the strongest outlet locations in the country in catchment terms.

Planning consent is in place for:

• Phase One: 182,500 sq ft of retail, leisure, cafés and restaurants

• Phase Two: 115,000 sq ft for what is planned to be one of the UK’s largest home and garden centres

• Potential Phase Three: A further 120,000 sq ft outlet phase, subject to planning approval

Much of the enabling and infrastructure work has already been completed, significantly de-risking the scheme ahead of full construction.

Leasing momentum has also been strong: around 66% of phase one space is already pre-let to brands including Calvin Klein, Hugo Boss, and Tommy Hilfiger, alongside F&B operators such as Wagamama, Pizza Express, and Five Guys.

A 15,000 sq ft M&S is also secured and a further 15% of space is either with solicitors or agreed under heads of terms.

The project is backed by Simon Waterfield, who brings more than 30 years’ experience delivering redevelopment schemes across the UK, including Worcester Trade Park, Cotswold Business Park, and Newton Business Park in Nottingham.

The project team includes architect Corstorphine & Wright, project manager and quantity surveyor Burnley Wilson Fish, civil and structural engineer BJB Consulting, M&E engineer Cundall, planning consultant Q+A Planning, main contractor Bowmer + Kirkland, highways consultant Peter Evans Partnership, and fit-out by Enborne.

Leasing is led by Sarah Hodkinson, formerly of McArthurGlen, while marketing is overseen by Patrick Hanson-Lowe, who previously ran marketing for the Bicester Village Collection’s nine European outlets and launched two schemes in China.

Outlet specialist Multi-Realm is set to be appointed as operator and asset manager, with a mandate to drive footfall, tenant sales and rental performance as the scheme matures.

Scotch Corner intends to list on the ARAM segment of the Aquis Stock Exchange Growth Market, which is a relatively new platform focused on real assets and infrastructure opportunities across the capital stack.

ARAM positions itself as an alternative to traditional REIT listings on larger exchanges such as the London Stock Exchange.

ARAM Advisors is the specialist listing and market advisory firm launched to focus ARAM.

Its management team is led by former managing director of Dow Jones Commercial EMEA and rugby world cup winner Michael Lynagh; former Aquis Exchange CFO & COO Jonathan Clelland; Duneane Asset Management director Donall McCann; Rob Rackind, chair of Inhale Capital and former global head of real estate at Credit Suisse Asset Management; and Martley Capital chief executive and former M7 founder, Richard Croft.

Shareholders of Aram Advisors include Prestbury Investments chairman Nick Leslau, property investor Nigel Wray, Henley IM, Moorfield, Zentra Group and Acuitus.

Simon Waterfield, chief executive of Scotch Corner Designer Village Holdings, said: “With the appointments of Oberon Capital and RetailBook, we are now commencing the fundraising process on what we believe is an exceptional opportunity for investors to benefit from the development of what will be the UK’s newest designer village, in the highest growth retail subsector…

“The pre-letting success we’ve had to date, and the brands that have either signed up already or that we are in dialogue with regarding the remaining space, provide strong endorsement of the desirability of the location and underscore our confidence in our business plan.

“We expect to be the first company to IPO on the newly launched Aquis Real Asset Market, creating an important new corporate finance template that allows SME developers such as us to access capital, while allowing retail investors direct access to projects and the associated returns that are usually reserved for private equity type professional investors and developers.”

Michael Lynagh, director at Aram Advisors, added: “Having launched ARAM in the middle of last year and flagged that we were expecting Scotch Corner to be the first company to IPO on this new market, today’s announcement marks an important milestone in achieving our goal of creating a platform that democratises access to the £1.3trn UK real estate market, enabling the general public to invest in opportunities typically reserved for professional investors.

“We look forward to welcoming Scotch Corner onto Aquis in due course, and to proving ARAM’s position as a viable new capital raising option for real estate owners and developers.”