Landsec (LON: LAND), the FTSE 100 property group, has agreed to buy the Metrocentre shopping centre in Gateshead for £516m net cash and is raising about £500m of new equity to help pay for it. It announced the deal at 7am today.
The shares closed yesterday at 624.5p, up 1.22% on the previous close of 617p, so no trading reaction to the news exists yet. That is about 14% below the 726p intraday high of the 5th of August.
Landsec is buying Metrocentre from Tynehawk Holdings (Jersey) Limited. The headline price was £530m before agreed reductions. The centre has 282 stores, 95% occupancy and more than 16m visitors a year, and the deal takes Landsec to three of the UK’s top 10 shopping centres.
Landsec puts the in-place net rental income at £41m, a 7.9% yield on the price. It expects a low double-digit unlevered IRR (annual return before borrowing) and says the price is roughly half replacement cost.
The new equity also funds a further purchase of about £100m to consolidate interests in existing retail assets, on which heads of terms are agreed but not finalised. Existing debt facilities cover the rest.
On Landsec’s figures, loan-to-value falls from 38.7% to 37.7% and net debt to EBITDA (earnings before interest, tax, depreciation and amortisation) from 8.4x to 7.9x. It guides to neutral for earnings per share for the rest of FY27, accretive from FY28, and about 62p of EPRA earnings per share by FY30, against 51.4p in FY26.
Our acquisition of Metrocentre represents a rare opportunity to obtain 100% control of a top-10 UK shopping centre.
Mark Allan, chief executive, Landsec
The placing is an accelerated bookbuild, a quick share sale to institutions, and is non-pre-emptive, so existing holders have no automatic right to new shares. The placing price is still to be set, with the bookbuild due to close no later than 4:30pm today. On our own estimate, £500m is about 10.7% of a market value of roughly £4.65bn.
UK retail investors can apply through RetailBook from £250, including in an ISA or SIPP, at the same price as the institutions. New shares are admitted at 8am on Monday. Completion, expected by the end of October, needs 75% bondholder consent and the dissolution of a legacy Intu entity, expected on the 9th of October.