Britain’s biggest commercial property owner has confirmed the acquisition of a stake in Kent’s Bluewater Shopping Centre following the recent sale of Sunderland’s prime retail centre, The Bridges, and the disposal of the Overgate Centre in Dundee in March.
Land Securities — which owns or manages more than 29m sq ft of offices, shopping centres and out-of-town retail parks — has purchased a 30 per cent stake in Bluewater from Australia’s Lend Lease for a £656 million sum. As part of the deal, Land Securities has also acquired full asset management rights for not only the centre but for an additional 110 acres of surrounding land for an additional £40 million.
This latest acquisition ties in with the new focus of Land Securities’ retail portfolio and gives the company a good opportunity to break into the lucrative south east market, which has remained a weak spot in its portfolio to date.
Managing director of Land Securities’ retail portfolio, Scott Parsons, says; “This acquisition, which increases our exposure to the south east, follows the recent disposals of Overgate, Dundee and The Bridges, Sunderland, and demonstrates the pace at which we are delivering on our strategy.”
Although the deal hugely diminishes Lend Lease’s presence at Bluewater, the Australian firm will retain a 25 per cent interest in the centre. Additional shareholders include Hermes and Aberdeen Asset Management with a 10 per cent stake, and M&G Retail and sovereign wealth fund GIC, who control 35 per cent.
Land Securities is certainly in a strong position in the UK at present, with its latest annual report showing a 12.2 per cent rise in net asset value thanks to an increase in property prices in the year to the end of March.
This, coupled with the revaluation of its portfolio, helped the firm to push pre-tax profits to a highly satisfactory £1.1 billion – almost doubling the sum of the previous year – whilst revenue profit rose by a comfortable 9.9 per cent.
After the expiry of rent-free periods, Land Securities expects its stake at Bluewater to result in an overall net yield of 4.1 per cent.
Land Securities acquired The Bridges in Sunderland in 1993. Seven years later it invested in a multi-million pound extension and refurbishment programme. Now it has sold on the 550,000 sq ft complex to AEW Europe for £152m.
Anchored by Debenhams, The Bridges contains 100 retail units let to the likes of Foot Locker, Top Shop, Disney and TK Maxx. “It currently trades well, but is not part of our strategic focus, and the strong market conditions for retail assets have allowed us to move quickly to crystallise value from the asset,” explained Land Securities retail managing director, Scott Parsons.
“Our retail strategy is to move the portfolio towards dominance, experience and convenience,” he added.
Built in 1988 and opened by the Princess Royal, The Bridges almost doubled in size, when Sunderland’s former central bus station was demolished in favour of more shops. Two years ago a new three storey Primark store opened as an extension to the centre, bringing the total number of people employed across the site to over 2,000.
There were reports in recent years that Land Securities was in discussions with Sunderland City Council about the purchase of the adjacent Crowtree Leisure Centre site once it closed, with the land being used to expand The Bridges. Those plans fell through when the authority decided to keep the leisure centre open.
The new owner of Sunderland’s only prestige shopping site is one of Europe’s leading real estate investment managers. Under their international umbrella organisation of AEW Global, AEW Europe and AEW Capital Management in North America and Asia employ almost 500 professionals in 14 offices managing €37m worth of assets.
Story: Kirsten Kennedy & Cliff Goodwin
