This is the first in the series of Cass / BCSC Master Classes for 2012, and is part of the themed group 'Diagnosing and Creating Investment Potential'. This group of master classes is focused upon appraising the investment potential of a shopping centre and understanding how a commercially viable and integrated shopping centre can be developed.

More than any other class of property, the stock of shopping centres is owned and managed by large scale property investors – insurance and pension funds, listed property companies, and collective investment funds. An understanding of why they invest in shopping centres, the strategies they pursue and the tools they use is therefore essential to any analysis of the shopping centre landscape. This master class will first map the two key forces in the development of the UK shopping centre sector over the last 60 years: the rise of centres to a dominant position as retail locations, alongside their rise to become a major element of investment portfolios.

Speakers:
Tony Key
Professor of Real Estate Economics,
Cass Business School.

Stewart Colderick
Head of Shopping Centre Investment,
CBRE

Programme:

1. The growth of shopping centres

- Changing formats: Long-run shifts in share of consumer spend and retail floorspace across shop units, shopping centres and retail warehouses
- Changing locations: The shift from in-town shop units and department stores, the rise of shopping centres and retail warehouses
- Centre formats: Development waves and changing styles of shopping centre building, the current size, location and vintage structure of the stock.

2. Shopping centres as investments

- Flows of investment in shopping centresand their role in investment portfolios
- Who owns the shopping centre stock: Splits by investor types, centre types and locations.

3. The performance of shopping centres

- What we expect from property: Risk, return, and yield; long-run rental and income growth
- What we expect from shopping centres: Scale of investment, operational management, tenant diversity, dealing with obsolescence
- What returns do we get: Performance history of rentals, incomes, yields and returns over 30 years with a comparison of shopping centres against other property, and the best and worst centres.

4. Market analysis

- Macro: Analysing shopping centre performance, demand and supply, forecasting models
- Micro: Assessing development and investment potential using catchment analysis, geo-demographics, gravity models.

5. Investment appraisal

- Approaches to investment analysis: The principles of yield and income capitalisation, discounted cash flow methods, Net Present Value (NPV) and Internal Rate of Return (IRR)
- Practical shopping centre appraisal: An extended example unpicking leases, reviews, expiries, other income flows and costs
- Investment process: Development decisions, buy-sell decisions, refurbishment.

6. Current issues in shopping centre investment

- Market prospects and forecasts; the primary secondary gap; dealing with obsolescence and redevelopment.