(LONDON) Land Securities has sold its stake in the Bullring shopping mall in Birmingham, England, to Australia's Future Fund for £210 million (S$482 million) in one of the biggest UK retail property deals of 2009.
News of the sale comes three weeks after Reuters reported Land Securities, Britain's largest property company, was in advanced talks to sell its one-third interest in the centre to the Australian sovereign wealth investor.
The price achieved reflects a net yield of 6.85 per cent.
'The absence of operational control over the Bullring made it an unusual asset within Land Securities' portfolio where we look to create value through successful development and active management of properties,' said Richard Akers, managing director of Land Securities Retail.
The Bullring had performed well for the group, Mr Akers also said, adding the sale proceeds would increase the group's flexibility to exploit future acquisition opportunities.
Land Securities shares shed one per cent to trade at 681 pence by 0843 GMT, against a 0.6 per cent fall in the FTSE 100 Index .
The Bullring sale follows an announcement last Friday that British Land, Land Securities' nearest rival, has plans to spend £1 billion on discounted UK real estate in the coming months after selling a 50 per cent stake in the highly leveraged Broadgate office complex in the City of London.
Some analysts said both firms had compromised on price to secure the transactions, amid hopes the largely illiquid UK real estate market might see an uptick in sales activity before end-2009.
'Although there are valid reasons for the Bullring and Broadgate disposals, the prices were a bit below our estimates because we forecast UK commercial property values to rise by 10 per cent from June-09 to June-10,' analysts at JPMorgan said in a note to clients.
'Moreover, the realised yields are substantially higher than those implied by the equity market,' the note said.
The 1.2 million square foot Bullring shopping centre opened in Autumn 2003 and is home to about 160 shops and restaurants, providing a total annual rental income of £45 million pounds. -- Reuters
Source: Business Times, 22 Sep 2009