New Investment Partner for Me

RNS Number : 0317N

British Land Co PLC

09 February 2009

 

NEW INVESTMENT PARTNER FOR MEADOWHALL AGREED

The British Land Company has today exchanged unconditional contracts to form a new 50:50 joint venture partnership for the freehold interest in its Meadowhall Shopping Centre, near Sheffield. 

London and Stamford Property Limited and its joint venture partner will acquire a 50 per cent stake in Meadowhall for £587.7 million*, at a net initial yield of 6.75%. The transaction will complete on Wednesday, 11 February, 2009. 

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, two petrol stations and the Meadowhall distribution centre. 

The purchase price will comprise a cash consideration of £170 million and values Meadowhall at £1.175 billion. The joint venture will continue to benefit from Meadowhall's £835 million of outstanding securitised third party debt at an average interest rate of 4.98 per cent.  

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. 

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

Chris Grigg, Chief Executive, British Land, said: "We are delighted to announce this important new partnership. As well as underlining the enduring appeal of our largest regional shopping centre, the transaction also has the effect of increasing our financial flexibility." 

Andrew Jones, Executive Director and Head of Retail, British Land, said: "This transaction reduces our exposure to our largest retail asset whilst allowing us to retain a substantial share in the future upside from long and strong cashflows. Meadowhall is truly a unique asset with enduring occupier appeal and in which we see great value. We look forward to delivering further value with our partners in the next few years."

*The transaction (taking account of Meadowhall's £835 million of existing third party debt) will comprise an amount of £540.2 million with a further £47.5 million payable upon completion of identified future lettings.

Ends

Notes to Editors…/ overleaf

Investment partner for Meadowhall agreed …. /2

Notes to Editors

British Land has grown rental income at Meadowhall from £48 million per annum in 1999 when it first acquired the Shopping Centre, to annual net rental income today in excess of £78 million.

British Land acquired Meadowhall Shopping Centre, plus certain nearby assets and development land in 1999 for £1.07 billion. As at September 2008, the 1.5 million sq ft Shopping Centre had an occupancy level of 97.4% and average lease length to first break was 12.1 years.  

Meadowhall comprises 10 anchor stores and 212 shop units, together with over 30 catering units and an 11 screen cinema.  Average contracted rent is £58.16.per sq ft.  Visitor numbers average 25 million per year. 

British Land withdrew marketing a partial investment stake in Meadowhall in October 2007 as a result of the uncertainty in the financial markets. 

British Land is the UK's second largest Real Estate Investment Trust with total assets, owned or under management, valued at £15.6 billion, as at September 2008. 

The portfolio, focused on the Out of Town Retail and London Office sectors, has the longest leases (average 13 years) and occupancy rates (97 per cent) amongst the highest of the major UK REITs. 

Retail assets account for 59 per cent of the portfolio - 83 per cent located at prime out-of-town sites.  Offices account for 39 per cent of the portfolio, of which 99 per cent is London-based. New office and retail developments - accounting for circa 5 per cent of the total portfolio - complement these holdings. 

Date: Monday, 9 February, 2009

Media enquiries:

Laura De Vere tel: [phone] mobile: [phone]

Investor Relations:

Amanda Jones tel: [phone] mobile: [phone]

 

END

 

 

MSCBUGDDISGGGCC