UPDATE: Land Securities' Metro Fund Sells Shopping Center For GBP112M

20th Jul 2010 13:31

By Anita Likus Of DOW JONES NEWSWIRES LONDON (Dow Jones)--The U.K.'s largest real estate investment trust, Land Securities Group PLC (LAND.LN), Tuesday said The Metro Shopping Fund, its joint venture fund with investor Delancey, sold the N1 shopping center for GBP112 million. The fund, which is 50-50 owned by Land Securities and Delancey, sold N1, which is located in London's Islington district, to Henderson Global Investors for its German business Warburg-Henderson KAG. The shopping center comprises 150,000 square feet of retail space, with shops such as Gap, Next and FCUK, entertainment including the VUE Cinema and the 02 academy, as well as several restaurants and bars. N1 was developed by U.K. regeneration specialists Centros Miller and opened in 2002 and the Metro Fund bought it in November 2007. "The successful sale of the N1 centre reflects the improvements made to the centre through the Metro fund's active management of the asset. We will now focus on our plans for the remaining assets in the fund," said Delancey's investment director Tim Haden Scott on behalf of Metro Shopping Fund. The Metro Fund is a limited partnership between Land Securities and Delancey formed in 2004 through the pooling of four properties: mixed use property Clapham's Shopstop, which includes retail, office and a car park, Victoria Place in the south west of London and retail and office accommodation at Notting Hill Gate. The fund then bought the Southside shopping centre in 2005 and sold the Victoria Place shopping centre to Ewart Properties Ltd. in 2007. Land Securities' head of retail portfolio management Ashley Blake said "we are pleased with the successful outcome of the sale and the proceeds will now be recycled into the fund." "Looking forward we are improving the retail offer at the Southside shopping centre in Wandsworth through asset management and development activity and will continue to look to drive improved performance across the remaining assets," he added. JP Morgan analyst Harm Meijer said that "the price reflects a 3% gain over the latest book value and a net purchasers yield of 5.3%, which we believe is a good deal for the sellers." The sale adds to a number of shopping center transactions in the U.K. so far this year and was the headline deal of the second quarter, but sales volumes are expected to weaken for the rest of the year. According to property advisor and agent Knight Frank, 26 shopping center deals were made so far this year, eclipsing the total for 2009 as a whole. But with limited evidence of more deals in the pipeline and a continuing scarcity of buying opportunities for prime assets, sales volumes over the remainder of the year are expected to fall when compared to the past three quarters, said Knight Frank. Buyers are also still concerned about the still weak occupier market after retailers went into administration in the recession. They fear the U.K.'s Autumn spending review could damp consumer confidence and spending appetite once more. The total value of shopping center transactions in the second quarter fell 5% from the first quarter, to GBP624 million. Deals include fund manager Rockspring's purchase of four shopping centers, the Quattro Portfolio, for GBP137 million from the Mall Fund, which is currently restructuring its debt ,and Land Securities buying the 300,000 square foot 02 Shopping & Leisure Center, also located in the north of London, from Matterhorn Paolos Partnership, for GBP125.9 million. Matterhorn Capital only bought the 02 barely a year ago for GBP92.5 million, indicating that investors are exploiting a recent recovery in prices. -By Anita Likus, Dow Jones Newswires; +44 20 7842 9407; [email protected] (END) Dow Jones Newswires July 20, 2010 08:31 ET (12:31 GMT)