Meadowhall

We’ve already talked about signs of life in Europe’s mall investment sector and in May the market received a timely boost with one of the biggest transactions in recent years. UK property development giant?British Land sold its 50% stake in the Meadowhall shopping centre in northern English city Sheffield.

The buyer is Norway’s sovereign wealth fund – which is co-owner along with Grosvenor of the famous Regent Street in London – in a circa €420 million deal. Norges Bank Investment Management is set to take full control of the huge out-of-town shopping centre, which is one of the biggest in Britain, having first invested to buy the initial half in 2012.

Meadowhall opened in 1990 on the site of the former East Hecla steelworks and at the time of opening it was the second largest shopping centre in the UK and visitor numbers stood at around 30 million by 2019, before the pandemic, with 290 stores plus 50 restaurants across 140,000 sq m

The deal values Meadowhall at around €860 million, well below the €1.25 billion the FTSE 250-listed British Land paid in 1999 to buy the centre from its original developers, Eddie Healey and Paul Sykes, or the circa €1.66 billion valuation when Norges Bank bought the 50% stake in 2012. British Land will remain as the manager of Meadowhall, receiving fees for running it.?

In terms of retail, the company has since shifted focus away from shopping centres towards out-of-town retail parks and I was in Orpington in south east England recently to hear about its strategy to look for further acquisitions to add to its portfolio, which British Land sees as cheaper and simpler to operate and experiencing high demand from retail and leisure tenants.

The company owns 25 schemes nationally, which it divides among retail warehousing, hybrid retail parks such as Nugent, which mix fashion and do-it-yourself, and shopping parks?like Fort Kinnaird in Edinburgh, ranked fourth nationally by sector specialist Trevor Wood Associates. In February Hammerson?agreed to sell the?Union Square shopping centre?in Aberdeen, Scotland, to an affiliate of Lone Star Real Estate Fund VI, for circa €129.9 million and the company is reportedly in talks to sell irs stake in designer outlet chain Value Retail for around €1.4 billion.

In April, US-based?Northwood Investors?emerged as an early leader in?a six-way race to acquire?the?Blanchardstown Centre, Dublin. The investor is understood to have put forward a first-round offer in the region of €580 million, a slight premium on valuations of around €550 million expected, although still about €170 million less than?Goldman Sachs?paid to acquire?Blanchardstown?from US private equity giant?Blackstone?in late 2020.

Indeed, the key to unlocking these deals appears to be a readiness to realise lower valuations and some owners remain unwilling to shift their positions, with a growing belief that strong occupational performance is not being recognised by would-be buyers.

IMAGE CREDIT (Meadowhall): Wikimedia/BCDS