F&C Asset Management

F&C Asset Management (formerly ISIS) is one of Europe's largest asset management companies, with approximately £120bn funds currently under management.

The challenge

ISIS managed Friends Provident's retail portfolio and CACI were asked to carry out a detailed assessment of one of their schemes - Friars Square in Aylesbury.

ISIS required detailed answers to the following questions:

	How would proposed developments in and around Aylesbury affect the performance of Friars Square?
	What is the centre’s potential for long term rental growth in light of this increased competition?
	What sort of strategies can be implemented to increase the value of the asset and maximize rental growth?

The solution

CACI's initial analysis focused on quantifying the impact on Friars Square of competing retail developments in locations such as Aylesbury, Oxford, High Wycombe and Hemel Hempstead. To forecast Friars Square's future sales and rental potential following the completion of these competing schemes, it was necessary to firstly establish Friars Square's current position in
Aylesbury and Aylesbury's overall position in the region. Integral to this assessment was a detailed retail floorspace audit of Aylesbury's current retail provision, as well as footfall counts in each of Aylesbury's retail 'zones.' These datasets then formed key inputs to the 'macro' and 'micro' gravity modelling process.

Gravity model outputs across a range of development scenarios were then cross-checked against turnover forecasts for all retailers currently trading in Aylesbury through application of sales productivity benchmarking techniques. This enabled CACI to forecast Friars Square's current turnover, sales density and sustainable rental potential. Importantly, this also allowed CACI to compare rental potential against current rent roll to enable the execution of an optimised, unit by unit rental strategy.

This firm base of understanding of Friars Square's current position allowed CACI to confidently predict future turnover and rental performance of Friars Square and within this assess a range of impact based scenarios to 2015. Finally, CACI provided ISIS with clear recommendations on the asset and strategies form maximising future scheme turnover and rental performance, given the scale and nature of competing retail developments in Aylesbury and the wider region.

The results and benefits

As a result of CACI's analysis, ISIS now have a comprehensive assessment of Friars Square's current performance relative to current and future competing areas of retail pitch in Aylesbury. In addition, ISIS now have a detailed understanding of any potential threat posed by competing shopping centre developments and how this will affect long term scheme performance and growth. The results from CACI's analysis have been crucial in determining the future direction of Friars Square.

Sue Bjorkegren, Head of Research at F&C Asset Management comments,

“We commissioned CACI to undertake research into the impact of competing schemes, both within the town and in neighbouring centres on one of our shopping centre holdings. We needed the research to help with medium-term strategic planning and the on-going management of the centre. We chose CACI because of their strong data modelling capability and were impressed by their conscientious approach to the project and their clarity in presenting the key findings. The report has been used in discussions with third parties and we have subsequently commissioned more shopping centre research from CACI.'’

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