LONDON (dpa-AFX) - Land Securities Group Plc (LAND.L), a real estate investment trust, Tuesday announced that it has acquired a 92 percent stake in a premier shopping center, Liverpool ONE, from a subsidiary of the Abu Dhabi Investment Authority and Grosvenor for 490 million pounds.
Of this total consideration, a 35 million pound payment to ADIA has been deferred for two years. Landsec's initial 455 million pound investment is anticipated to deliver an income return of approximately 7.5 percent. The center's current rental income is 4 percent below its estimated rental value or ERV. However, with Landsec's top-tier operating platform, strong brand partnerships, and potential ERV growth, rental income is expected to increase significantly in the coming years.
The deal includes performance-related overage arrangements with ADIA. Landsec anticipates that the investment will achieve an unlevered IRR consistent with the guidance provided during its recent half year results.
Initially, the transaction will increase the company's LTV by approximately 2.7 percentage points, and after refinancing the asset's existing secured debt, it is expected to contribute around 1.3p to annualized EPS.
The acquisition intends to grow its investment in major retail destinations, recycling the proceeds from its 464 million pounds of non-core sales earlier in the year. Landsec will now own and manage seven of the top 30 shopping centers in the UK, providing brands and visitors with a unique portfolio of regionally dominant, urban retail and leisure destinations.
Liverpool ONE, a major retail destination with 69 percent owned by a subsidiary of the Abu Dhabi Investment Authority or ADIA and 23 percent by Grosvenor, was opened in 2008.
Over the past year, retail sales have risen by 5 percent, with new leases agreed at 10 percent above ERV, while re-lettings and renewals achieved 5 percent above the previous passing rent, and overall occupancy reached 96 percent which demonstrates its position to capitalize on the trend of key brands prioritizing fewer, larger, and higher-quality stores evidenced by recent expansions and new leases with retailers like M&S, Sephora, Uniqlo, and Zara.
Tuesday, LAND.L is currently trading at GBp 570.50, less by 1.55% on the London Stock Exchange.
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