LAND
SECURITIES GROUP PLC ("Landsec")
Landsec
sells £617m of assets since September, including £400m hotel
portfolio
Landsec announces it has completed
the sale of its entire hotel portfolio to Real Estate funds managed
by Ares Management ("Ares") alongside operating partner EQ Group
("EQ") for a cash consideration of £400m. This compares to a
September 2023 book value of the assets of
£404m.
The disposal is in line with
Landsec's strategy to release capital from sectors in which the
company does not have scale and to focus its resources on areas
where it has genuine competitive advantage.
The hotel portfolio, which comprises
21 assets, is fully let to AccorInvest and generated net income of
£28.4m over the company's last reported financial year. The income
is 100% turnover-linked with a lease contract expiring in
2091 and 12-yearly tenant-only break
options, limiting Landsec's ability to influence performance or add
further value to the assets.
Of the total consideration, £350m
has been received on completion with the remaining £50m payable
within 24 months. Landsec will receive 6% interest p.a. on this
outstanding balance, which is ahead of the company's marginal cost
of borrowing. The net proceeds of the sale will initially be used
to repay debt.
Across a number of separate
transactions, Landsec has also completed the disposal of £217m of
other non-core assets since the end of September. These disposals
included amongst others the company's two smallest retail outlets,
one retail park, and two leisure assets and a local shopping centre
in London. The combined consideration was in line with the
September 2023 book value of these assets.
Combined, these transactions bring
Landsec's total disposals since September 2023 to £617m. This
compares to £46m of acquisitions since then, comprising a handful
of smaller site assembly opportunities adjacent to existing
assets. All
else equal, the resulting £572m of net disposals would reduce
Landsec's 34.4% LTV as of September 2023 by over 3ppt on a
pro-forma basis. In the short term, the substantial amount of
disposals will reduce the company's annualised earnings by c. 4%,
ahead of the planned reinvestment of these disposal
proceeds.
As Landsec's pro-forma net debt will
be £1bn lower than it was in March 2022, before the material rise
in interest rates, the company has substantial headroom to invest
at an attractive point in the cycle.
Mark Allan, Chief
Executive, Landsec, said: "We said in late 2020 that our
focus would be on areas where we have a genuine competitive
advantage. In line with that strategy, we have continued to recycle
capital out of assets where our ability to add further value is
limited. The sale of our hotel portfolio and other non-core assets
will further strengthen our balance sheet and leave us well placed
to take advantage of opportunities in the market as they
arise."
Ends
About Landsec
At Landsec, we build and invest in
buildings, spaces and partnerships to create sustainable places,
connect communities and realise potential. We are one of the
largest real estate companies in Europe, with a portfolio of
retail, leisure, workspace and residential hubs. Landsec is shaping
a better future by leading our industry on environmental and social
sustainability while delivering value for our shareholders, great
experiences for our guests and positive change for our
communities.
Find out more at
landsec.com
Please contact:
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Press
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Investors
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Sara Doggett
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Edward Thacker
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+44 (0)7834 431258
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+44 (0)7887 825869
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sara.doggett@landsec.com
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Edward.thacker@landsec.com
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