The move by the council is the largest deal in a series of purchases of local shopping centres by councils which have bought in the hope of being able to improve the retail centres in their towns.

Earlier this month St Modwen sold its Catford shopping centre to Lewisham council.

The price paid reflects a net initial yield of 8.2%

In a statement Woking Borough council said it had bought it to “to strengthen the economic vitality of the borough through improving job opportunities and enhancing the shopping, cultural and entertainment experience for residents and visitors.”

The council had owned the freehold of Wolsey Place since it was first built in partnership with Norwich Union (now Aviva) and received 19% of the rents paid by businesses and residents in the centre.

The Public Works Loan Board has financed the council’s purchase of the remaining 81% interest in Wolsey Place from I M Properties.

Wolsey Place totals 65 shops and the council expects to generate £1.5m a year profit after all costs from the centre. It totals 230,000 sq ft of retail space and is anchored by a 23,000 sq ft Sainsbury’s supermarket and a 22,000 sq ft Boots. Approximately 30% of the income generated by the property is derived from a 100,000 sq ft office tower let to Virgin Media for a further ten years.

The purchase received extensive cross-party support at a Special Meeting of the council on 2 February 2010 and the acquisition was completed on 19 February 2010.

Woking Borough Council’s Leader of the Executive, Cllr John Kingsbury, said: “The acquisition of Wolsey Place is a significant step towards underpinning the medium to long-term financial stability of the council and strengthening the economic vitality of the town. With this key asset under our control, we hope to attract new retailers into the town and generate more jobs for local people. We will also be able to influence and shape the future development of Woking town centre.”

James Findlater, leading the sale at Jones Lang LaSalle, said: “The sale is a strategic move for IM Properties who are recycling their equity into core assets. Woking Borough Council was able to take advantage of its access to low borrowing costs to fund the purchase which allowed them to compete with private sector investors. They will also benefit from marriage value from joining their two ownerships.”

Jones Lang LaSalle advised IM Properties.

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