TIDMLAND
RNS Number : 1329R
Land Securities Group PLC
03 November 2021
3 November 2021
Land Securities Group PLC ("Landsec")
Landsec progresses growth strategy with investment in
MediaCity
Landsec today announces that it has acquired a majority stake in
MediaCity, the 37 acre media, digital and tech hub in Salford,
Greater Manchester previously owned by a 50:50 JV between Legal
& General and Peel L&P. Landsec will partner with Peel
L&P who will retain a 25% stake and continue to serve as asset
and development manager.
MediaCity has a gross asset value of GBP567.5m. Landsec will pay
a net purchase price of GBP425.6m for the 75% interest. The
transaction includes GBP293.6m of debt (GBP220.2m on a
proportionate basis), reducing Landsec's equity investment to
GBP207.6m which is satisfied in cash drawn from existing
facilities. Landsec will also have an obligation to pay a further
amount capped at GBP15m linked to building remediation works which
will be completed post-transaction.
The waterside destination is home to some of the world's most
exciting creative, tech and media brands, from BBC North and ITV to
Ericsson, The Hut Group, Kellogg's and over 250 creative and tech
businesses as well as schools and universities. The biggest tech
and media hub outside London, MediaCity produces 50,000 hours of
content every year, and is home to 8,000 residents and workers.
Phase one was completed 10 years ago and comprises 1.48m sq ft
across 11 buildings including work space, studios, incubator labs,
residential as well as ancillary leisure and retail. It is 96% let
with a WAULT of just under 10 years. It generates GBP31.1m of net
operating income per annum (100%), reflecting a 5.8% net initial
yield. Over half of the income has rent reviews linked to RPI, with
collars and caps guaranteeing future rental uplifts.
Phase two has already seen the completion of two residential
towers - 'The Green Rooms' and 'The Lightbox' as well as the
award-winning mixed-use commercial space, the 'Tomorrow building'.
This second phase has outline planning consent for an additional
1.6m sq ft including office and residential, with an estimated
Gross Development Value (GDV) of GBP750m, bringing the total space
for phase two to 2.3m sq ft,.
Mark Allan, Landsec CEO said: " Mixed-use developments with a
clear sense of place are becoming an increasingly important
ingredient in the fabric of cities. Opportunities to participate in
large scale, established mixed-use developments are scarce and
MediaCity is one such opportunity.
"This acquisition presents us with the opportunity to deploy
capital immediately into high quality income producing assets and
also to invest further over time through the development of phase
two. MediaCity is a compelling addition to our portfolio, providing
the opportunity to invest and further develop the estate with the
potential to be onsite from the first half of 2023. I'm
particularly excited to be able to work alongside Peel, whose
experience and expertise complements our own."
The acquisition demonstrates further progress with Landsec's
'grow through urban opportunities' strategic pillar, which is
focused on providing long-term income generation and development
optionality through mixed-use schemes in London and other major UK
cities.
The MediaCity purchase also underscores Landsec's strategic
approach to investing in regional cities where it believes it can
acquire significant scale. Greater Manchester is well placed to
support Landsec's strategy - it is the UK's largest regional
economy, the largest regional office market, in terms of stock,
take-up and transactional liquidity, and is at the forefront of the
emerging institutional build to rent market.
Steven Underwood, Peel L&P CEO said : "In the past 10 years
we have created a unique destination, currently unrivalled in the
UK for its breadth of offering, from global content creation and
innovation, to waterside living and leisure. Our successful
partnership with L&G over the past six years has made possible
great strides in MediaCity's phase two delivery, seeing over 60,000
sq ft of commercial space, a 110 room hotel and 750 apartments
added to MediaCity over that period.
" Our new partnership with Landsec is another exciting step
towards our stated vision to double the size of MediaCity. As
MediaCity enters its 10(th) year we look forward to working
alongside Landsec whose ethos and vision are aligned with ours, to
deliver MediaCity's global potential benefitting all MediaCity's
local, regional and national stakeholders."
Wes Erlam, Director of Urban Regeneration, L&G:
"Complementing our significant wider regeneration of Salford,
MediaCity is a successful example of our dynamic approach to
recycling profits as we continue to put our capital to work,
investing in new projects which are reviving town and city centres
across the UK.
"Working in close partnership with Peel, and leveraging our
combined deep sector expertise, since our investment in 2015 we
have together added over 600,000 sq ft of built accommodation and
are in a position today where MediaCity has welcomed over 2,500
residents and 8,000 workers to this landmark media and tech hub.
And in Greater Manchester as a whole, we have invested over GBP400
million into new homes, life sciences and media and technology. As
MediaCity now reaches its next stage of maturity, this sale enables
us to release growth capital for deployment into new opportunities,
as we continue to identify early stage projects and ventures where
we can create significant value."
The world's first BREEAM sustainable community, MediaCity is
managed by Peel Media, part of Peel L&P, and owned in a 50:50
joint venture with Legal & General . The acquisition sees
Landsec purchase L&G's share plus 50% of Peel's share, totaling
75% of the joint venture.
About Landsec
At Landsec, we build and invest in buildings, spaces and
partnerships to create sustainable places, connect communities and
realise potential. We are one of the largest real estate companies
in Europe, with a GBP10.8 billion portfolio of retail, leisure,
workspace and residential hubs. Landsec is shaping a better future
by leading our industry on environmental and social sustainability
while delivering value for our shareholders, great experiences for
our guests and positive change for our communities.
Find out more at landsec.com
Please contact:
Press Investors
Sara Doggett Ed Thacker
+44 20 7024 5004 +44 20 7024 5185
Sara.doggett@landsec.com Ed.thacker@landsec.com
About Peel L&P - Realising Possibility
We are an ambitious regeneration business with generations of
history, heritage and expertise in our DNA. First established in
1972, Peel L&P is now responsible for some of the most
transformational development projects in the UK today.
Owning and managing 12 million sq ft of property and 20,000
acres of land and water, our holdings are concentrated in the north
west of England but we also own and manage significant assets
throughout the UK with a total portfolio value of GBP2.4
billion.
As a part of the Peel Group; we are integral to a business that
strives to make a positive impact on people's lives.
Our legacy matters. We take great pride in the outcomes we
achieve, the people we work with, the way we go about our business
and the transformational projects we deliver.
Our specialist teams have a proven track record in delivering
high-quality, legacy projects across land, property, water and
airspace. This includes airports, hotels, waterways, media hubs,
event spaces, leisure facilities, retail, workspaces, residential
development, industrial & logistical space, public realm,
historic gardens and the renewable energy sector. We also believe a
prosperous future depends on our ability to harness nature to
create sustainable growth.
We reuse, repurpose and re-energise natural resources to develop
and maintain vital infrastructure across the UK. From wind power,
to waterways, to waste-to-fuel solutions, we own and operate
assets, manage resources and develop energy solutions to serve our
communities and our partners.
Through market-leading solutions, we support government and
local authorities to reach their carbon reduction and waste
management targets. We help businesses to achieve their commercial
goals while managing the transition towards net-zero carbon. We
engage local communities and support them in their ambition to
thrive by re-energising regional economies.
Peel L&P is an agile and ambitious business with a legacy of
success for a long-term, sustainable future.
We see possibility. We deliver transformation.
For more information visit: www.peellandp.co.uk or follow us on
Twitter @PeelLandP
About MediaCity
MediaCity is a waterside community that's part of Salford Quays
in Salford, Greater Manchester. It's home to some of the world's
most exciting creative, tech and media brands, from BBC North and
ITV to Ericsson, The Hut Group, Kellogg's and over 250 creative and
tech businesses. Three education establishments are based there,
including the University of Salford's dedicated MediaCity campus,
while at its heart is HOST, the Home of Skills & Technology,
which supports innovators in data, analytics, cybersecurity, AI,
gaming and immersive technologies. Alongside a growing roster of
local, independent food, drink and retail operators is a dedicated
shopping centre, parks and public spaces, and one of the UK's most
visited arts centres, The Lowry. Sustainability and climate
resilience is core to MediaCity's future: home to the UK's largest
cluster of net zero carbon buildings, it has two dedicated
Metrolink tram stops and is currently developing a 10-year
biodiversity plan. It is also a popular residential neighbourhood,
with MediaCity as a whole set to double in size within the next
decade.
For more information visit: https://www.mediacityuk.co.uk/
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