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Highlights
- Acquisition Details: Landsec acquires a majority stake in Liverpool ONE for £490m, with a deferred payment of £35m.
- Expected Returns: Initial £455m outlay delivers a 7.5% income return with significant rental growth potential.
- Strategic Expansion: Landsec now owns and manages seven of the UK’s top-30 shopping centres.
Landsec (LSE:LAND), one of the UK’s largest property companies, has announced the acquisition of a 92% stake in Liverpool ONE, a premier shopping and leisure destination. The transaction, valued at £490 million, positions Landsec to further expand its footprint in major UK retail hubs and capitalize on rental growth opportunities.
The stake was acquired from a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA) (69%) and Grosvenor (23%).
Acquisition Structure and Expected Returns
Of the total £490 million consideration, £35 million is deferred for two years as part of the agreement with ADIA. Landsec's initial outlay of £455 million is expected to yield an income return of approximately 7.5%, highlighting the immediate value of the investment.
Rental income at Liverpool ONE currently sits 4% below the estimated rental value (ERV), presenting a clear opportunity for growth. Landsec expects to unlock this potential through its leading operating platform, strong brand relationships, and further ERV increases over time.
The acquisition aligns with Landsec's strategy to reinvest proceeds from its earlier £464 million of non-core asset sales into major retail destinations, driving long-term value creation.
Strengthening Market Position in UK Retail
With the acquisition of Liverpool ONE, Landsec will now own and manage seven of the UK’s top-30 shopping centres, solidifying its leadership in regionally dominant urban retail and leisure destinations. The portfolio creates an unparalleled offering for leading retail brands and millions of visitors across the country.
Opened in 2008, Liverpool ONE is one of the UK’s most modern and successful shopping centres. The destination attracts a footfall of 22 million people annually and hosts a diverse mix of retail, food, beverage, and leisure brands.
Liverpool ONE’s Strong Performance
The performance metrics of Liverpool ONE underscore its resilience and appeal:
- Retail sales have increased by 5% in the past 12 months.
- New leases have been signed at 10% above ERV.
- Relettings and renewals were achieved 5% above previous passing rent.
- The centre maintains a robust 96% occupancy rate.
The centre has attracted several key retail brands in recent months, including M&S, Sephora, Uniqlo, and Zara, all of which have expanded or signed new leases. This reflects a broader trend of brands focusing on “fewer, bigger, and better stores” in high-performing destinations.
Financial Impact and Long-term Returns
The transaction includes certain performance-related overage provisions with ADIA. Despite this, Landsec expects the investment to deliver an unlevered Internal Rate of Return (IRR) in line with its recent half-year guidance.
On the financial front, the acquisition is expected to initially add approximately 2.7 percentage points to Landsec’s Loan-to-Value (LTV) ratio. Following the refinancing of existing secured debt on the asset, the acquisition is also forecast to contribute approximately 1.3 pence to earnings per share (EPS) on an annualized basis.
