There is a shopping centre of 24,000m of gross lettable area (GLA) located in a town of 250,000 inhabitants with basically no competition other than a small gallery anchored by a hypermarket and a retail park. The shopping is anchored by the best fashion brands in the market and it has a very short weight of food and entertainment component so it is perceived as the place to go if you want to buy clothing and accessories. There is a larger competitor shopping centre located 15 km. away which has recently being refurbished and includes a large Primark shop there on top of all the best fashion brands too and a big component of food and beverage shops plus leisure schemes.

The owner has decided to explore the potential implementation of a 2,500m Primark shop given that the tenant could be interested to enter in the shopping centre with the conditions as per the attached spreadsheet which are compared to the current ones. Just to clarify, the Capex is the cost necessary to merge a few units in the shopping centre in order to create the unit required by Primark, and, the Void period is the time that the units to be merged are vacant and therefore not producing income nor paying service charges.

The conditions of the "big brands" are difficult to be negotiated so it should be assumed that the parameters cannot be improved. The duration of the lease contract will be for 20 years with the first 5 years of mandatory period and then 5 additional periods of 3 years until the end of the duration.

1. What would be the rationale of the owner to consider this potential project, please provide a list of pro's for the project.

2. What will happen to the value of the shopping centre should this project will be carried out?

3. According to you, should the owner go ahead with this project and why