UK - Land Securities Group, the UK's largest real estate investment trust (REIT), announced today it has agreed the sale of Trillium to Telereal, a property investment company, for £750m (€832m).
The sale of the property outsourcing arm, due to be completed on 12 January 2009, will generate cash proceeds of £444m, which will be used to reduce the Land Securities' debt and strengthen its balance sheet. A further £25m of cash will be deferred by up to two years.
Francis Salway, chief executive at Land Securities, said: "We will now focus on our core property investment and development activities. The cash proceeds will strengthen our balance sheet in the current market and subsequently put us in a stronger position as the cycle turns."
The sale generates a loss of around £340m, with the price down 25% from the £1bn asked for when Trillium first went on the market in November 2007.
The sale does not include the Accor hotel portfolio. Telereal, which owns £4bn of assets, will assume net external debt of £49m when the sale is complete.
Since March 2008, Trillium has achieved a return of approximately £232m from its investments and disposals.
Graham Edwards, chief executive officer at Telereal, said: "Trillium has performed extremely well over recent years, building up its business to make it a market leader in corporate real estate. Telereal's focus on property investment has also seen strong performance for us. Together we will be able to provide an even better service to our customers and make the most of new opportunities for growth."
Ian Ellis, chief executive at Land Securities Trillium, will leave the Land Securities Board once the transaction is complete and become chairman of the joint management team.
"Having been a former joint CEO of Telereal, his understanding of both businesses will place us in a strong position for the future," said Edwards.
Land Securites abandoned its plans to split its London retail and real estate arms in November 2008 because of "adverse market conditions" and 20.7% drop in its net asset value in the six months to 30 September 2008. It currently has a commercial property portfolio worth over £14bn.
