St James Centre set for revamp in wake of new sale

ONE of Edinburgh's ugliest buildings is set to be sold for the second time in just five months, raising hopes that it will soon undergo a multi-million pound revamp.

Henderson Global Investors is understood to be locked in talks to buy the St James Centre, which is seen as a blot on the Capital's landscape.

The company specialises in buying up old-fashioned centres and turning them into high quality malls to increase their value.

The news has been welcomed by city leaders, who are keen to see the eyesore building in one of the city's most prominent locations redeveloped.

The centre was bought by KFC franchise owner Michael Herbert's Donegall Place Investments last December for £169 million.

It was initially reported that the company planned to invest more than £150m in demolishing and redeveloping the building.

But a month after purchasing the centre, the firm said it had no intention of redeveloping the 240,000 square feet complex.

Instead, it revealed plans to improve signs at the centre, pursue an "aggressive bidding strategy" for the available units and improve the food court, with franchises such as Burger King and KFC said to be moving in later this year.

Council leader Donald Anderson said today that it would be "excellent news" if a deal had been agreed between the two firms.

He added: "When the centre was originally sold, all of the other investors were keen to look at a redevelopment.

"We know that Donegall Place Investments were more keen to hang on to the centre with a view to selling it on, and so this deal could mean there will be a significant redevelopment of the building.

"I do not know much about Henderson Global Investors, apart from the fact that they are very big players in this market and they have a substantial holding in other shopping centres.

"I couldn't say quite why such an increased bid has come in so soon after the initial sale. Certainly we have not had any discussions about the future of the centre with this company."

Henderson Global Investors was one of several companies in the bidding in December - all of which said they planned to invest in redevelopment of the site.

The company offered just £500,000 less than Donegall Place Investments, and it is thought talks between the two companies have been ongoing since then, with speculation rife that the current owners are ready to accept a bid of £184m.

If the sale does go ahead, the company would place the St James Centre into its UK shopping centre fund.

It already has assets of more than £580m, including a 50 per cent stake in Glasgow's Buchanan Galleries, and investment in the Bluewater shopping centre in Kent, among others.

The fund specialises in development, adding return to the investment, and last year submitted an application to Hull City Council to carry out a £300m development of the Princes Quay Shopping Centre.

A spokesman for Henderson Global Investors said he could not comment on the story today.

No-one from Donegall Place Investments was available for comment.