Landsec (LSE:LAND) has agreed to acquire a 100% interest in the Metrocentre shopping complex in Gateshead for net cash consideration of £516 million, expanding the property group’s portfolio of UK retail destinations.
The acquisition price represents a 7.9% yield based on Metrocentre’s in-place net rental income of £41 million.
Metrocentre comprises 1.86 million square feet of retail and leisure space alongside an adjacent retail park. The complex attracts more than 16 million visitors annually and has a high occupancy rate.
Landsec intends to partly finance the acquisition through an equity issue.
Acquisition Expands Landsec Retail Portfolio
The transaction forms part of Landsec’s strategy to invest £1 billion in major retail assets.
Following completion, Landsec will own three of the UK’s top 10 shopping centres and eight of the top 30. Retail destinations are expected to account for approximately 46% of the group’s annualised rental income.
Completion of the Metrocentre acquisition is subject to bondholder approvals and the dissolution of a legacy Intu entity. Landsec is targeting completion by the end of October.
The company said leasing activity and disposals of lower-growth office properties support its expectations for like-for-like rental income growth and faster EPRA earnings per share growth through the end of the decade.
Landsec Portfolio
Land Securities Group, known as Landsec, owns a portfolio valued at approximately £10 billion across the UK.
The group’s assets include major retail destinations, office properties and a residential development pipeline.
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