Landsec Buys Liverpool One From ADIA And Grosvenor In £490M Deal
Landsec has further committed to the retail sector after acquiring a 92% stake in shopping centre Liverpool One from a wholly owned subsidiary of the Abu Dhabi Investment Authority and Grosvenor for a sum of £490M.
The acquisition is in line with Landsec’s objective to grow its investment in major retail destinations, recycling the proceeds from its £464M of noncore sales earlier in the year, the company said.
Following the deal, Landsec now owns seven of the top 30 shopping centres in the UK. In its most recent results, it said the retail portfolio was 96% occupied.
The company also recently announced a new master plan for Lewisham town centre, retaining some of the shopping centre it owns and developing student, rental and co-living residences.
The structure of the deal is such that a payment of £35M to ADIA has been deferred for two years, with the income return on the initial £455M outlay expected to be circa 7.5%.
Landsec added that the centre’s rental income is 4% below estimated rental value, so combined with its operating platform, brand relationships and further ERV growth, it anticipates rental income to “grow meaningfully” in the coming years.
Opened in 2008, Liverpool One attracts footfall of 22 million people per year. Retail sales have grown by 5% over the past 12 months, with new leases signed 10% above ERV and relettings and renewals 5% above previous passing rent.
The focus will be on fewer, bigger and better stores from key brands, such as recent upsizes and new lettings with M&S, Sephora, Uniqlo and Zara.
The transaction includes certain performance-related overage provisions with ADIA. Including this, Landsec expects its investment to deliver an unlevered internal rate of return in line with the guidance it provided at its recent half-year results.
“The top 1% of the UK’s shopping destinations provide brands with access to 30% of all in-store retail spend, which is why we continue to see brands focus on fewer, but bigger and better stores in the best locations,” Landsec CEO Mark Allan said in a statement. “Liverpool One already has a great line-up of brands in a thriving location and we look forward to building on this.”
“Liverpool One is not only one of the most remarkable regeneration stories, re-defining what long-term investment and partnership can achieve, it continues to be one of the UK’s most successful retail and leisure destinations,” Grosvenor Property UK CEO James Raynor said. “Looking ahead, we have ambitious plans to grow and diversify the business and we will reinvest the proceeds from the sale in our core portfolio including our 10-year programme of investment in London and residential debt business, which has supported the delivery of 3,370 homes in just two years.”
