The FTSE 100 landlord is taking full control of one of Britain's biggest shopping centres, betting big on prime retail while tapping shareholders for half a billion pounds.
Land Securities (LSE: LAND) has agreed to buy the Metrocentre in Gateshead for £516m, funding the purchase with a roughly £500m share issue as it deepens its exposure to the UK's top shopping destinations. The deal gives Landsec full ownership of the Tyneside centre, which draws more than 16 million visitors a year and counts Apple, Zara and Primark among its tenants.
The acquisition price equates to a net initial yield of 7.9%, which Landsec says is roughly half what it would cost to build an equivalent centre from scratch today. The company is funding the purchase, plus a further £100m to buy out partners in its existing retail portfolio, through a placing and retail share offer worth about £500m, with the rest coming from existing debt facilities.
Landsec said the deals would be earnings-accretive from the 2028 financial year and would leave its balance sheet marginally stronger, with loan-to-value edging down to 37.7%. Chief executive Mark Allan described growing the group's exposure to major retail destinations as its 'highest conviction call', pointing to strong income yields and growth prospects for the best-located assets.
Metrocentre was previously part of Intu, the shopping centre operator that collapsed into administration in 2020, underlining how sentiment towards large covered shopping centres has shifted. Landsec said sales across its existing major retail assets have risen 26% since March 2022, against just 1% for the wider UK retail market, as brands consolidate into fewer, larger stores in the strongest locations while traditional high streets continue to struggle.
Once the deal completes, Landsec will own three of the UK's top ten shopping centres, cementing its position as a consolidator of prime retail property at a time when many landlords remain cautious on the sector. Investors will be watching how the new shares are absorbed and whether footfall and sales momentum at Metrocentre can be sustained under full Landsec ownership.
This report is based on Land Securities Group’s announcement and coverage by UK Investor Magazine. Company announcements can be tracked via London Stock Exchange RNS and Investegate, and the full results calendar is worth watching for the next update.
This article is for general information only and does not constitute investment advice or a recommendation to buy or sell any security. Photo: mostafa meraji on Unsplash.
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