Wednesday, June 19, 2024

British Land sells shopping mall stake to focus on retail parks

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British Land has announced it is selling its 50% stake in the Meadowhall Shopping Centre in Sheffield to its joint venture partner Norges Bank Investment Management for £360m.

The deal is part of British Land’s strategy to focus more on retail parks and reduce its exposure to enclosed shopping malls after the pandemic, which accelerated online shopping trends. Out-of-town retail parks have proved to be successful due to the ease of accessing shops and the opportunity for a greater leisure experience.

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Including the recent £7m sale of some ancillary land, the total valuation of the Meadowhall estate is £734m, which is 3% above the September 2023 book value.

After repaying around £200m in net debt, British Land expects to receive proceeds of approximately £156m from the transaction.

The deal, which is anticipated to close in July 2024, will lower British Land’s proportionally consolidated loan-to-value ratio by 2.7 percentage points for the first half of 2024. British Land will remain as the asset manager for Meadowhall and continue earning fees.

The sale proceeds will be used for general corporate purposes, including reinvesting in retail parks aligned with British Land’s strategic shift away from enclosed shopping centres that have been under pressure.

“Following the sale of Meadowhall, 93% of our portfolio is now in our preferred segments of retail parks, campuses and London urban logistics,” said Simon Carter, Chief Executive of British Land.

“We will continue to grow our retail park portfolio; with low capex requirements parks offer attractive cash returns and at 99% occupancy we are delivering strong rental growth.”

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