Property group London & Stamford (LSP) and its joint venture partner Green Park Investments have disposed of their half-share in the Meadowhall Shopping Centre on the outskirts of Sheffield.
Norges Bank Investment Management, Norway's sovereign wealth fund, is paying £1.525bn for a 50% stake in the shopping centre, which also counts British Land as a stakeholder.
The purchase price reflects a net initial yield of 5.09% and a £11.2m uplift in the valuation as at March 31st 2012, of which £1.76m is London & Stamford's share. London & Stamford's stake in Meadowhall was 15.7%.
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The net proceeds of the sale for the joint venture's 50% direct share is £307.9m, generating a profit of £155.9m. Taken together with income generated for the joint venture during the period of ownership of £55.5m, the total return on equity (excluding fees and after deducting the cost of acquiring surrounding development land and capital expenditure) is 129.3%, an equity multiple of 2.29 and an internal rate of return of 32.3%. However, accounting rules means London & Stamford's net asset value falls by 3.8p per share as a result of the sale.
"There is no doubt that there is strong demand globally for prime UK property and therefore we believe that this sale is timely. LSP and its joint venture partner will benefit from the additional cash the sale provides ensuring we are poised to take advantage of opportunities in the market which we are confident exist," said Raymond Mouild, Chairman of London & Stamford.
Meanwhile, the deal has spurred Norges Bank Investment Management to sign a joint venture agreement with British Land covering the Meadowhall Shopping Centre along with 74 acres of adjoining development land.
"As one of our largest shareholders and a leading international investor, Norges is an ideal strategic partner for British Land," said Chris Gigg, Chief Executive Officer of British Land.
JH
