Disposal of Interest in Meadowhall

RNS Number : 1096O

London & Stamford Property PLC

08 October 2012

 



8 October 2012

LONDON & STAMFORD PROPERTY PLC

("London & Stamford", "LSP" or the "Group")

DISPOSAL OF INTEREST IN MEADOWHALL

London & Stamford Property Plc (LSE: LSP.L), today announces that together with its Joint Venture Partner Green Park Investments ("Green Park") it has sold its 50% interest in the freehold of Meadowhall Shopping Centre ("Meadowhall") to Norges Bank Investment Management ("NBIM"), the Manager of the Norwegian Government Pension Fund Global.

The purchase price values Meadowhall at £1.525 billion, which reflects a net initial yield of 5.09% and a £11.2 million uplift in the valuation as at 31 March 2012. (£1.76 million being LSP's share).

The Joint Venture acquired its 50% interest in Meadowhall in February 2009 with LSP owning 31.4% and Green Park owning the remaining 68.6%. The purchase price valued Meadowhall, one of the UK's biggest and most successful shopping centres, at £1.175 billion and the valuation reflected a net initial yield of 6.75%. The Joint Venture's 50% direct share of Meadowhall represented a £170 million total cash investment of which £47 million was deferred.  As part of the sale, deferred payments from the original purchase have been settled and the final purchase price agreed at £152.0 million.  LSP's share of this investment in Meadowhall was £47.8 million.

The net proceeds of sale for the Joint Venture's 50% direct share is £307.9 million, generating a profit of £155.9 million. Taken together with income generated for the Joint Venture during the period of ownership of £55.5 million, the total return on equity (excluding fees and after deducting the cost of acquiring surrounding development land and capex) is 129.3%, an equity multiple of 2.29 and an IRR of 32.3%.

As a consequence of the sale and after adjusting for the Bond and for debt mark to market allowances, which under accounting rules can only be recognised on a sale, LSP's net asset value will be reduced by 3.8p per share.

However, LSP's cash balance now stands at almost £200 million, which, when taken alongside its Joint Venture partners' unspent commitment and with reasonable gearing assumptions, produces total firepower of up to £1 billion as the Company positions itself to take advantage of expected future investment opportunities.

Raymond Mould, Chairman of London & Stamford, said:

"We are delighted to have completed the sale of our interest with Green Park in the Meadowhall Shopping Centre to NBIM.

The performance of the Centre has been outstanding since our acquisition in February 2009.  Despite difficult trading conditions, tenant performance has been generally good and in some cases exceptional.  In almost all cases we have been protected under the guarantee provisions of our original acquisition where tenants have experienced difficulty. 

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."

For further information contact:

London & Stamford Property Plc Raymond Mould Patrick Vaughan Martin McGann	Tel: [phone]
Kreab Gavin Anderson Richard Constant James Benjamin Anthony Hughes	Tel: [phone]

Notes to editors:

London & Stamford Property Plc was set up to exploit opportunities that it anticipated in the UK property cycle and is a group UK REIT. The Company has a highly experienced management team and invests in and actively manages commercial property, including office, retail and distribution real estate assets, all of which are located in the UK, and in residential assets in Central London.

The Company is traded on the London Stock Exchange's Main Market (LSP.L) and is authorised by the FSA to carry out certain regulated activities.

Further information on the Company is available from the Company's website: www.londonandstamford.com

 

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