Landsec buys Liverpool One shopping centre for £490m

Land Securities has bought a controlling stake of 92% in Liverpool One, the city’s biggest shopping centre, for £490 million as it looks to build its retail portfolio, focusing on ‘bigger and better’ stores. The UK property company bought the stakes of the Abu Dhabi Investment Authority (Adia), which owned 69%, and Grosvenor, which owned 23% of Liverpool One.

“The top 1% of the UK’s shopping destinations provide brands with access to 30% of all in-store retail spend, which is why we continue to see brands focus on fewer, but bigger and better stores in the best locations,” said Mark Allan, CEO, Landsec. “I am delighted that we have added another top-ten centre with a highly attractive return profile.”

Liverpool One, which opened in 2008, is regarded as one of the UK’s premier shopping centres with an annual footfall of 22 million people and a mix of retail, food & beverage and leisure brands. Retail sales have grown by 5% in the past 12 months and overall occupancy is 96%.

“The income return on Landsec’s initial £455 million outlay is expected to be around 7.5%,” the group said in a statement. “The centre’s current rental income is 4% below ERV, so combined with the benefits of our leading operating platform, strong brand relationships and further ERV growth, rental income is expected to grow meaningfully in the coming years.”

Negotiations on the deal have been going on for months, with Adia pulling out of a £350m deal to sell its stake in Liverpool One to Landsec earlier this year. Under the terms of the deal now agreed, a payment of £35 million to Adia is deferred for two years.

Landsec’s retail portfolio now includes seven of the top 30 centres in the UK, the group said, including Trinity Leeds and Bluewater in Stone, Kent, “providing brands and visitors with a unique portfolio of regionally dominant, urban retail and leisure destinations.”

Earlier this year, Landsec swung back to a profit after a rebound in occupancy and rental income in London.

“Liverpool ONE is a phenomenal destination and we’re incredibly proud of what we’ve accomplished with and for the city over the last 25 years,” said James Raynor, CEO, Grosvenor Property UK. “It’s not only one of the most remarkable regeneration stories, re-defining what long-term investment and partnership can achieve, it continues to be one of the UK’s most successful retail and leisure destinations.”

Grosvenor intends to grow and diversify the business, reinvesting the proceeds from the sale in its core portfolio, including its 10-year programme of investment in London and residential debt business, which has supported the delivery of 3,370 homes in just two years.