British Land sells 50% of Meadowhall mall for EUR 673m

UK REIT British Land has sold a 50% stake in its Meadowhall shopping centre for £588 mln (EUR 673 mln) to AIM-listed property investor London & Stamford and a partner. In a statement issued on Monday, British Land said it has exchanged contracts to form a new 50:50 joint venture partnership for the freehold interest in its flagship property located near Sheffield. The transaction reflects a net initial yield of 6.75%. The deal will complete on 11 February.

British Land will be appointed property managers to Meadowhall and will act jointly with London and Stamford as strategic advisors for the joint venture company, which will also own and administer certain nearby properties, including a Premier Inn Hotel, TGI restaurant, and two petrol stations which are part of the Meadowhall site.

The purchase price, valuing Meadowhall at £1.175 bn, will comprise a cash sum of £170 mln, of which £123 mln to be paid on completion and £47 mln as a further deferred payment. The deferred payment is based on Meadowhall achieving additional income from identified new lettings. The transaction also includes £835 mln of outstanding securitised third-party debt at an average interest rate of 4.98%. The debt, in the form of securitised bonds, is not due for repayment until 2032.

The 74-acre surrounding development land, along with other ancillary sites, will remain wholly in British Land ownership, although the JV will have the option to acquire it at a later date at market value.

Meadowhall is one of only six out of town super-regional Shopping Centres in the UK and is home to some of the most established international and national retailers in the country, including Debenhams, Marks & Spencer, Next and Primark. Located in South Yorkshire and first opened in 1990, it comprises approximately 1.5 million sq ft of retail and leisure accommodation and around 12,000 car spaces.

The formation of the joint venture is one of a number of actions by which British Land is seeking to increase its financial flexibility. The company said it continues to consider its options so as to position it to benefit from the opportunities presented by current market conditions.

Raymond Mould, the non-executive chairman of London & Stamford Property, said: 'Opportunities to invest in such an asset are very rare and this transaction represents an outstanding acquisition for us and our partner. We look forward to working closely together with British Land to add further value to Meadowhall.'

Strategic advice will be provided jointly by LSI Management LLP, advisor to London & Stamford Property and British Land, and property management services will be provided by British Land.