Landsec to Acquire Metrocentre for £516 Million

Landsec, the owner of London's Bluewater shopping centre and Liverpool One, has entered into an agreement to purchase the Metrocentre in Gateshead for £516 million. The deal, announced by the London-listed real estate group, aims to expand Landsec's retail holdings.

Tynehawk Holdings, a consortium of investors, is selling the Metrocentre. This group previously acquired the mall after its former owner, Intu, collapsed in 2020. The sale process for Metrocentre began earlier this year and attracted interest from various parties, including Frasers Group.

Landsec plans to finance the acquisition through a £500 million equity issue, which will include a retail offering to UK investors, supplemented by existing debt. Shares in Landsec experienced a slight decline of 1.52 percent, trading at 615p in early market activity.

The Metrocentre is a significant retail destination, attracting over 16 million visitors annually and generating approximately £650 million in retail sales from its 282 stores. Landsec's acquisition also encompasses an adjacent retail park with 15 units.

The transaction is subject to the dissolution of a legacy legal entity related to Intu's administration, anticipated next month, and the consent of bondholders.

Mark Allan, CEO of Landsec, stated, "Growing our investment in major retail destinations remains our highest conviction call, given the high income yields and attractive income growth on offer for the right assets." He added, "Our acquisition of Metrocentre represents a rare opportunity to obtain 100% control of a top-10 UK shopping centre."

This acquisition signals a strategic shift for Landsec, reinforcing its focus on retail assets rather than office developments, aligning with its previous commitment to invest £1 billion in major retail properties. The company is also pursuing a separate acquisition valued at approximately £100 million to further consolidate its retail portfolio, though details were not disclosed.

Upon completion of both deals, major retail destinations are expected to constitute 46 percent of Landsec's annualized rental income. This move follows Landsec's recent sale of a central London office building, 123 Victoria Street, for £211 million, representing a 20 percent discount to its listed price.

Landsec reported strong customer demand and lettings growth in the five months leading up to August 31, projecting a net rental income growth of between 3 and 5 percent for the fiscal year ending March 2027.