Land Securities buys Metrocentre in Gateshead; raises GBP500 million
(Alliance News) - Land Securities Group PLC on Thursday agreed to a GBP516 million deal to acquire the Metrocentre in Gateshead, partially funded by a GBP500 million equity issue.
The London-based property investor is acquiring the shopping centre from Tynehawk Holdings Jersey Ltd.
Landsec said Metrocentre attracts more than 16 million visitors a year and generates about GBP650 million in retail sales. The centre has 282 stores across 1.86 million square feet of lettable floorspace, alongside an adjacent retail park covering 200,000 square feet.
Based on in-place net rental income of GBP41 million, the acquisition consideration implies a net rental income yield of 7.9%.
The acquisition is in line with Landsec's strategy to invest a further GBP1 billion in major retail assets. Following completion, Landsec will own three of the UK's top 10 and eight of the UK's top 30 shopping centres.
Chief Executive Officer Mark Allan said "Our acquisition of Metrocentre represents a rare opportunity to obtain 100% control of a top-10 UK shopping centre. Metrocentre offers the scale, relevance and quality of catchment where demand from brands is highest, as they focus on fewer, bigger, better stores in the strongest locations."
Landsec said relettings and renewals in the five months to August 31 were well ahead of previous passing rent. It continues to expect like-for-like net rental income growth of about 3% to 5% for the year ending March 31, 2027.
Separately, the company has proposed to raise about GBP500 million through an equity issue. The issue will comprise a placing with institutional investors, a UK retail offer through RetailBook and subscriptions by Allan and Chief Financial Officer for about GBP70,000 in aggregate.
The bookbuilding process will determine the price per new share, commencing on Thursday.
Landsec explained the net proceeds of the raise will partially fund the Metrocentre acquisition and a further acquisition in Landsec's existing retail portfolio for about GBP100 million. Landsec will fund the remaining consideration from existing debt facilities on its balance sheet.
Completion of the Metrocentre acquisition is subject to the dissolution of a legacy entity from the Intu Properties group and bondholder consent to a restructuring of outstanding Metrocentre Finance PLC bonds and the acquisition. Completion is expected by the end of October.
Shares in Landsec fell 0.6% to 620.50 pence on Thursday morning in London.
By Niall Holden, Alliance News reporter
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