REG - Land Sec. Group PLC - Landsec exchanges on the sale of 21 Moorfields

Land SecuritiesAnnouncement

21/09/2022 13:00

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RNS Number : 1781A  Land Securities Group PLC  21 September 2022

21 September 2022

 

Land Securities Group PLC ("Landsec")

 
Landsec and Lendlease exchange contracts on 21 Moorfields for £809m

 

Landsec announces that it has exchanged contracts for the sale of 21
Moorfields, EC2 to an investment vehicle managed by global real estate and
investments group, Lendlease (ASX:LLC). The total consideration for the sale
amounts to £809m, which, after outstanding development-related items results
in a net cash receipt to Landsec of £733m.  Rothesay is providing financing
for the acquisition with a 10 year senior term loan.

 

21 Moorfields is a premium 568,500 sq ft London office development fully
pre-let to Deutsche Bank AG (DB) on a 25 year lease, with an annualised net
rent of £38m. Built directly above Moorgate station, the asset is targeting
sustainability ratings of BREEAM Excellent and LEED v3 Gold.

 

Landsec will retain the responsibility for completing the development, with
practical completion expected in Q1 2023. Lendlease will manage the investment
vehicle, on behalf of its investment partners including Australia's TCorp and
its own minority interest.

 

The total consideration of the disposal represents an effective 9% discount to
the March 2022 value, yet crystallises an anticipated development profit of
£145m, representing 25% profit on cost. The sale is in line with Landsec's
strategy to recycle capital out of mature London offices and reduces the
company's loan to value from 34% to 30% based on a pro-forma March 2022
balance sheet, further strengthening its strong financial base. Following its
strategic review in late 2020, Landsec has now sold £1.8bn of London offices
at an average yield of 4.35%.

 

Completion of the transaction is expected to take place in the coming week and
the net proceeds of the disposal will initially be used to pay down debt.
Landsec's low financial leverage post the sale of this profitable development
provides the company with significant flexibility to invest in future
opportunities with a higher forward return. The company maintains its guidance
on earnings growth provided in the full year results statement in May.

 

Marcus Geddes, Managing Director, Central London at Landsec said: "21
Moorfields is a fantastic example of Landsec's development expertise in
delivering a high-quality project at one of the most complex construction
sites in London. We are particularly proud to have achieved a number of
engineering firsts associated with the development of such a significant
building which sits directly above both Moorgate Underground Station and the
new Crossrail line to Liverpool Street.

 

"These achievements, combined with the securing of a 25-year pre-let agreement
with Deutsche Bank, has culminated in substantial grade A office space with
long-term income, the value from which we can now unlock in order to recycle
capital into new opportunities, in line with our growth strategy."

 

Neil Martin, Chief Executive Office, Europe, Lendlease said: "The scale of
this joint investment in the City of London reflects the global appetite for
premium and sustainable office assets in the world's key gateway cities. In
addition to our close partnerships with international capital, Lendlease also
brings our global expertise in funds and asset management to this deal at 21
Moorfields.

 

"This significant acquisition adds size and weight to our European investments
platform and contributes to our global funds under management target of AU$70
billion by FY26. In addition to converting our AU$117 billion development
pipeline, our team will continue to scope on-market opportunities across
Europe as we seek to add further scale to our investments platform in the
region."

 

Stewart Brentnall, Chief Investment Officer at TCorp (NSW Treasury
Corporation) said: "TCorp has been actively pursuing direct property
investment opportunities across Europe and is pleased to expand its
relationship with Lendlease by partnering in the landmark 21 Moorfields
opportunity. This strategic initiative contributes return, diversity and
sustainability to our global real estate exposures. This is TCorp's first
direct investment into the London Office market and our second UK transaction
after acquiring a large scale, high quality logistics asset earlier this
year."

 

Harish Haridas, Head of Commercial Real Estate Debt at Rothesay, said: "We are
delighted to support the acquisition of this unique new addition to the City
of London's premium office stock. These types of high quality, secured
commercial real estate loans are attractive to us and play an important part
in our investment portfolio, providing long-term security for the pensions we
protect."

 

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 £12 billion
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 www.landsec.com (http://www.landsec.com)

 

 

About Lendlease

Lendlease is a globally integrated real estate and investments group with core
expertise in shaping cities and creating strong and connected communities.
Founded in 1958, we're listed on the ASX and operate across Australia, Europe,
Asia and the Americas.

 

We manage funds and assets for some of the world's largest real estate
investors. We also have a strong track record in creating award winning urban
precincts where communities thrive, and delivering essential civic and social
infrastructure.

 

Learn more at www.lendlease.com/europe (http://www.lendlease.com/europe)

 

About TCorp

TCorp is the financial services partner to the NSW public sector, providing
best-in-class investment management, financial management solutions and
advice. With $100.7bn of assets under management, TCorp is a top 10 Australian
investment manager and is the central borrowing authority of the state of NSW,
with a balance sheet of $124.3bn.

 

About Rothesay

Rothesay is the UK's largest pensions insurance specialist, purpose-built to
protect pension schemes and their members' pensions. With over £50 billion of
assets under management, we secure the pensions of more than 810,000 people
and pay out, on average, approximately £200 million in pension payments each
month.

 

Rothesay is dedicated to providing excellence in customer service alongside
prudent underwriting, a conservative investment strategy and the careful
management of risk. We are trusted by the pension schemes of some of the UK's
best known companies to provide pension solutions, including Asda, British
Airways, Cadbury's, the Civil Aviation Authority, National Grid, the Post
Office and telent.

 

Rothesay has two substantial institutional shareholders, GIC and Massachusetts
Mutual Life Insurance Company ("MassMutual"), who provide the company with
long-term support for its growth and development. In September 2020, our
shareholders increased their investment in Rothesay through a transaction
which valued the business at £5.75bn at that time.

 

Rothesay refers to Rothesay Limited and its subsidiaries and is the trading
name for Rothesay Life Plc, an insurance company authorised by the Prudential
Regulation Authority and regulated by the Financial Conduct Authority and the
Prudential Regulation Authority. Firm Reference Number: 466067. Rothesay Life
Plc is registered in England and Wales with company registration number:
06127279 and registered address: Rothesay Life Plc, The Post Building, 100
Museum Street, London WC1A 1PB. Further information is available at
www.rothesay.com (http://www.rothesay.com)

 

 

 Please contact:
 Press                     Investors
 Sara Doggett              Edward Thacker
 +44 (0)7834 431258        +44 (0) 7887 825869
 sara.doggett@landsec.com  edward.thacker@landsec.com

 

Rothesay: Anthony Marlowe, Head of Communications & Public Affairs

+44 (0)7912 550184 or anthony.marlowe@rothesay.com
(mailto:anthony.marlowe@rothesay.com)

Lendlease: Thomas Dearnley-Davison, Senior Communications Manager

+ 44 (0) 7889 594 165 or Thomas.DearnleyDavison@lendlease.com
(mailto:Thomas.DearnleyDavison@lendlease.com)

 

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