REG - British Land Co PLC - Paddington Central Joint Venture

British LandAnnouncement

25/04/2022 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220425:nRSY1283Ja&default-theme=true

RNS Number : 1283J  British Land Co PLC  25 April 2022

25 April 2022

 

British Land sells 75% stake in the majority of its Paddington Central assets
to GIC for £694m

 

British Land is pleased to announce we have exchanged on the sale of a 75%
interest in the majority of our Paddington Central assets to GIC.  This
transaction establishes a new joint venture (the "Joint Venture") with
ownership split 75:25 for GIC and British Land respectively.  Completion is
unconditional and will be within three months.  The total consideration of
£694m, is 1% below September 2021 book value and represents a NIY of
4.5%.

 

This transaction delivers against one of our key strategic priorities of
proactively recycling capital out of mature assets where we have created
considerable value.  Proceeds from the transaction will be invested into
value accretive development opportunities we own across our portfolio as well
as growth areas including development-led urban logistics in London and
innovation campuses.

 

This latest partnership is another example of how we identify opportunities to
drive value from our best-in-class operational platform.  We will continue to
act as asset manager for the campus and development manager for future
opportunities including 5 Kingdom Street for which we will earn fees.

 

Simon Carter, CEO British Land said: "We are delighted to be partnering with
GIC again and this second joint venture with them demonstrates the success of
our relationship at Broadgate as well as the quality of the assets and the
opportunity at Paddington Central.

 

Paddington has been an excellent investment for British Land and this
transaction is a great illustration of our strategy in action.  Since
acquiring Paddington Central in 2013, we have driven significant value through
asset management and development across the campus.  We are pleased to enter
into this innovative JV structure so that we can continue to play a meaningful
role in the development of the campus whilst also releasing capital to invest
in other value accretive opportunities across our business."

 

Lee Kok Sun, Chief Investment Officer of Real Estate, GIC, said, "We are
pleased to invest in Paddington Central, a high-quality office-led mixed-use
campus with retail and leisure uses. It is very well-located with connectivity
to national rail services and key transport links to Heathrow, West London and
Oxford. Our earlier investment in Broadgate has demonstrated the high value of
acquiring central London campuses and we are confident that this asset will
generate resilient long-term returns."

 

Tracy Stroh, Region Head of Europe, Real Estate, GIC, added, "We are seeing
returning demand in the take-up of new office spaces that are of high quality
and in prime locations. We are pleased to partner with British Land again and
look forward to leveraging their best-in-class capabilities to drive value
across Paddington Central. We believe this investment will be a good addition
to our Europe portfolio."

 

Background to Paddington Central and the Joint Venture

Paddington Central was acquired in 2013 for £470m, at the time comprising
three buildings, a retail and leisure cluster and two development sites.  In
2015 we completed the acquisition of 1 Sheldon Square for £210m and in 2017
we completed the development of 4 Kingdom Street which achieved rents 40%
ahead of the best rents at the campus on acquisition.  Overall, the campus
has delivered an average total property return of 9% per annum since
acquisition.

 

The Joint Venture will initially comprise the following assets : 2 and 4
Kingdom Street, 1 and 3 Sheldon Square (including the retail and leisure
element), the Gateway development site and surrounding moorings.

 

The Novotel at 3 Kingdom Street and the development site at 5 Kingdom Street
currently remain outside the Joint Venture.  On completion, GIC will be
granted an unconditional option (via a separate joint venture vehicle
established for this purpose) for a period of six months to acquire 50% of 5
Kingdom Street, a 438,000 sq ft development opportunity for c.£68.5m (plus
share of capex) which includes some contingent consideration.  GIC will also
be granted an unconditional option (via the Joint Venture) to acquire 3
Kingdom Street at prevailing market value which expires five years from
completion.

 

Financial effects of the transaction

The gross asset value of the assets acquired by the Joint Venture was £936m
as at 30 September 2021 on a 100% basis and the net rental income attributable
to those assets was £39m in FY 2021.  We expect the transaction to reduce
EPS per share by 1.6p on an annualised basis prior to reinvestment.  The
transaction will marginally decrease NTA per share (post fees and taxes) and
will reduce leverage by c.500bps immediately on completion with proceeds to be
reinvested in development and growth opportunities in line with strategy.

 

The gross asset values for 3 and 5 Kingdom Street were £62m and £122m
respectively as at 30 September 2021.  The net rental income attributable to
3 and 5 Kingdom Street was not material.

 

 

 ENDS

 

Enquiries:

 

Investors & Analysts:

 

Jo Waddingham            07714 901166

 

Media:

 

Lizzie King                    07808 912784

 

UBS                             020 7567 8000

(Financial Adviser to British Land)

Fergus Horrobin

Jonathan Retter

Aadhar Patel

 

GIC

Mah Lay Choon

Senior Vice President, Corporate Communications

+65 6889 6841

mahlaychoon@gic.com.sg

 

Toh Chuan Ting

Associate, Corporate Communications

+65 8309 1038

tohchuanting@gic.com.sg

 

 

 

About British Land

Our portfolio of high quality UK commercial property is focused on London
Campuses and Retail & Fulfilment assets throughout the UK. We own or
manage a portfolio valued at £13.3bn (British Land share: £9.8bn) as at 30
September 2021 making us one of Europe's largest listed real estate investment
companies.

 

We create Places People Prefer, delivering the best, most sustainable places
for our customers and communities. Our strategy is to leverage our best in
class platform and proven expertise in development, repositioning and active
management, investing behind two key themes: Campuses and Retail &
Fulfilment.

 

Our three Campuses at Broadgate, Paddington Central and Regent's Place are
dynamic neighbourhoods, attracting growth customers and sectors, and offering
some of the best connected, highest quality and most sustainable space in
London. We are delivering our fourth Campus at Canada Water, where we have
planning consent to deliver 5m sq ft of residential, commercial, retail and
community space over 53 acres. Our Campuses account for 70% of our portfolio.

 

Retail & Fulfilment accounts for 30% of the portfolio and is focused on
retail parks which are aligned to the growth of convenience, online and last
mile fulfilment. We are complementing this with urban logistics primarily in
London, focused on development-led opportunities.

 

Sustainability is embedded throughout our business. In 2020, we set out our
sustainability strategy which focuses on two time-critical areas where British
Land can create the most benefit: making our whole portfolio net zero carbon
by 2030, and partnering to grow social value and wellbeing in the communities
where we operate.

 

Further details can be found on the British Land website at
www.britishland.com (http://www.britishland.com)

 

About GIC

GIC is a leading global investment firm established in 1981 to secure
Singapore's financial future. As the manager of Singapore's foreign reserves,
we take a long-term, disciplined approach to investing, and are uniquely
positioned across a wide range of asset classes and active strategies
globally. These include equities, fixed income, real estate, private equity,
venture capital, and infrastructure. Our long-term approach, multi-asset
capabilities, and global connectivity enable us to be an investor of choice.
We seek to add meaningful value to our investments. Headquartered in
Singapore, we have a global talent force of over 1,800 people in 10 key
financial cities and have investments in over 40 countries. For more
information on GIC, please visit www.gic.com.sg or LinkedIn
(https://www.linkedin.com/company/gic/?originalSubdomain=sg) .

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  JVEUSAVRURUSUAR