THE head tenant at Hereford's Maylord shopping centre wants out. Property investor PruPIM is selling its interest in the county's biggest retail development, meaning a planned £10 million makeover of the four-acre city centre site is, at best, on hold.

Earlier this year, the Hereford Times revealed that PruPIM was ready to start talks with Herefordshire Council over a new rental deal for Maylord which would save the centre from stagnation.

Herefordshire Council owns the freehold for the centre under an arrangement that earns the authority more than £300,000 a year. PruPIM is the headlease holder and sub-lets the shops to retailers.

The proposed deal had PruPIM cutting back the amount of rental income from the shops that it paid to the council, from about 24% to around 10% - or a minimum of around £170,000 a year.

PruPIM would have compensated the council for the "lost" rent with a £3.6 million lump sum payment and then investing around £10 million in a makeover and extension of the centre to attract more big-name retailers over the next five years.

All that is now up in the air. PruPIM confirmed yesterday (Wednesday) that it was selling its interest in the centre.

Trevor Hankin, director of fund management, said: "PruPim has taken the decision to offer the Maylord Shopping Centre for sale to the market. We constantly review our portfolios and the decision was taken after careful consideration and completing a full review process to re-gear the leasehold."

To Herefordshire Council, that means any major new investment in Maylord is on hold.

Malcolm MacAskill, the council's head of asset management and property services, said: "The fact that PruPIM is putting its interest in the Maylord on the market will obviously delay any proposed improvements, but it is a matter the new tenants will have to consider and discuss with the council."

Herefordshire Council's cabinet agreed to explore a new deal for Maylord when it met in secret session in January. Then, members were warned that doing nothing could see the centre stagnate, with good retailers leaving, shoppers heading to other centres, and both rental income and investment value falling.

The current rent deal was negotiated when the 20-year-old centre was being built. The then Hereford City Council went into partnership with Norwich Union Insurance to develop the four-acre site for between £15-20 million.

Norwich Union sold its interest in 1994 and Prudential Insurance took over the lease 18 months later.

Papers prepared for the secret cabinet meeting said there had been no significant investment in Maylord since it opened. The centre needed modernisation and was "rather static" as an investment, the papers said.

PruPIM's payment of 24% meant projects to refurbish or develop Maylord were not financially viable, cabinet heard.

Members were told the council had two options - an outright sale of the freehold or re-structuring the rent.

Under the proposed deal, the centre would have been extended to make room for large shop units over the service road running alongside Blueschool Street.

Central areas were to be refurbished and some shop fronts expanded. There was also the posibility of of putting the whole centre under a canopy.

Any transaction over the headlease would, cabinet heard, be conditional on identified projects being delivered.