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RNS Number : 1283J
British Land Co PLC
25 April 2022
25 April 2022
British Land sells 75% stake in the majority of its Paddington
Central assets to GIC for GBP694m
British Land is pleased to announce we have exchanged on the
sale of a 75% interest in the majority of our Paddington Central
assets to GIC. This transaction establishes a new joint venture
(the "Joint Venture") with ownership split 75:25 for GIC and
British Land respectively. Completion is unconditional and will be
within three months. The total consideration of GBP694m, is 1%
below September 2021 book value and represents a NIY of 4.5%.
This transaction delivers against one of our key strategic
priorities of proactively recycling capital out of mature assets
where we have created considerable value. Proceeds from the
transaction will be invested into value accretive development
opportunities we own across our portfolio as well as growth areas
including development-led urban logistics in London and innovation
campuses.
This latest partnership is another example of how we identify
opportunities to drive value from our best-in-class operational
platform. We will continue to act as asset manager for the campus
and development manager for future opportunities including 5
Kingdom Street for which we will earn fees.
Simon Carter, CEO British Land said: "We are delighted to be
partnering with GIC again and this second joint venture with them
demonstrates the success of our relationship at Broadgate as well
as the quality of the assets and the opportunity at Paddington
Central.
Paddington has been an excellent investment for British Land and
this transaction is a great illustration of our strategy in action.
Since acquiring Paddington Central in 2013, we have driven
significant value through asset management and development across
the campus. We are pleased to enter into this innovative JV
structure so that we can continue to play a meaningful role in the
development of the campus whilst also releasing capital to invest
in other value accretive opportunities across our business."
Lee Kok Sun, Chief Investment Officer of Real Estate, GIC ,
said, "We are pleased to invest in Paddington Central, a
high-quality office-led mixed-use campus with retail and leisure
uses. It is very well-located with connectivity to national rail
services and key transport links to Heathrow, West London and
Oxford. Our earlier investment in Broadgate has demonstrated the
high value of acquiring central London campuses and we are
confident that this asset will generate resilient long-term
returns."
Tracy Stroh, Region Head of Europe, Real Estate, GIC , added,
"We are seeing returning demand in the take-up of new office spaces
that are of high quality and in prime locations. We are pleased to
partner with British Land again and look forward to leveraging
their best-in-class capabilities to drive value across Paddington
Central. We believe this investment will be a good addition to our
Europe portfolio."
Background to Paddington Central and the Joint Venture
Paddington Central was acquired in 2013 for GBP470m, at the time
comprising three buildings, a retail and leisure cluster and two
development sites. In 2015 we completed the acquisition of 1
Sheldon Square for GBP210m and in 2017 we completed the development
of 4 Kingdom Street which achieved rents 40% ahead of the best
rents at the campus on acquisition. Overall, the campus has
delivered an average total property return of 9% per annum since
acquisition.
The Joint Venture will initially comprise the following assets :
2 and 4 Kingdom Street, 1 and 3 Sheldon Square (including the
retail and leisure element), the Gateway development site and
surrounding moorings.
The Novotel at 3 Kingdom Street and the development site at 5
Kingdom Street currently remain outside the Joint Venture. On
completion, GIC will be granted an unconditional option (via a
separate joint venture vehicle established for this purpose) for a
period of six months to acquire 50% of 5 Kingdom Street, a 438,000
sq ft development opportunity for c.GBP68.5m (plus share of capex)
which includes some contingent consideration. GIC will also be
granted an unconditional option (via the Joint Venture) to acquire
3 Kingdom Street at prevailing market value which expires five
years from completion.
Financial effects of the transaction
The gross asset value of the assets acquired by the Joint
Venture was GBP936m as at 30 September 2021 on a 100% basis and the
net rental income attributable to those assets was GBP39m in FY
2021. We expect the transaction to reduce EPS per share by 1.6p on
an annualised basis prior to reinvestment. The transaction will
marginally decrease NTA per share (post fees and taxes) and will
reduce leverage by c.500bps immediately on completion with proceeds
to be reinvested in development and growth opportunities in line
with strategy.
The gross asset values for 3 and 5 Kingdom Street were GBP62m
and GBP122m respectively as at 30 September 2021. The net rental
income attributable to 3 and 5 Kingdom Street was not material.
ENDS
Enquiries:
Investors & Analysts:
Jo Waddingham 07714 901166
Media :
Lizzie King 07808 912784
UBS 020 7567 8000
(Financial Adviser to British Land)
Fergus Horrobin
Jonathan Retter
Aadhar Patel
GIC
Mah Lay Choon
Senior Vice President, Corporate Communications
+65 6889 6841
mahlaychoon@gic.com.sg
Toh Chuan Ting
Associate, Corporate Communications
+65 8309 1038
tohchuanting@gic.com.sg
About British Land
Our portfolio of high quality UK commercial property is focused
on London Campuses and Retail & Fulfilment assets throughout
the UK. We own or manage a portfolio valued at GBP13.3bn (British
Land share: GBP9.8bn) as at 30 September 2021 making us one of
Europe's largest listed real estate investment companies.
We create Places People Prefer, delivering the best, most
sustainable places for our customers and communities. Our strategy
is to leverage our best in class platform and proven expertise in
development, repositioning and active management, investing behind
two key themes: Campuses and Retail & Fulfilment.
Our three Campuses at Broadgate, Paddington Central and Regent's
Place are dynamic neighbourhoods, attracting growth customers and
sectors, and offering some of the best connected, highest quality
and most sustainable space in London. We are delivering our fourth
Campus at Canada Water, where we have planning consent to deliver
5m sq ft of residential, commercial, retail and community space
over 53 acres. Our Campuses account for 70% of our portfolio.
Retail & Fulfilment accounts for 30% of the portfolio and is
focused on retail parks which are aligned to the growth of
convenience, online and last mile fulfilment. We are complementing
this with urban logistics primarily in London, focused on
development-led opportunities.
Sustainability is embedded throughout our business. In 2020, we
set out our sustainability strategy which focuses on two
time-critical areas where British Land can create the most benefit:
making our whole portfolio net zero carbon by 2030, and partnering
to grow social value and wellbeing in the communities where we
operate.
Further details can be found on the British Land website at
www.britishland.com
About GIC
GIC is a leading global investment firm established in 1981 to
secure Singapore's financial future. As the manager of Singapore's
foreign reserves, we take a long-term, disciplined approach to
investing, and are uniquely positioned across a wide range of asset
classes and active strategies globally. These include equities,
fixed income, real estate, private equity, venture capital, and
infrastructure. Our long-term approach, multi-asset capabilities,
and global connectivity enable us to be an investor of choice. We
seek to add meaningful value to our investments. Headquartered in
Singapore, we have a global talent force of over 1,800 people in 10
key financial cities and have investments in over 40 countries. For
more information on GIC, please visit www.gic.com.sg or LinkedIn
.
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