British Land raised £301m in a placing, retail offer and subscription and will use the proceeds to part fund the acquisition of a portfolio of retail parks for £441m.
In aggregate 71,227,309 new ordinary shares were placed at a price of 422 pence, which represents a discount of 3.6% to the closing price on 2 October 2024, which was 437.80 pence.
The company has agreed a deal to acquire a portfolio of seven retail parks for £441m. The remaining sum of the consideration will be financed from existing cash and in place facilities.
The seven retail parks are being purchased from Brookfield at a net initial yield of 6.7% and topped up net initial yield of 7.2%. The assets have a passing rent of £29.5m, a topped up passing rent of £31.9m and an ERV of £30.4m.
Occupancy across the portfolio is 99% and all of the retail parks benefit from a “major superstore anchor”. The portfolio, which totals 1.9m sq ft, has a weighted average unexpired lease term is 4.5 years to break and 5.9 years to expiry.
The company said that the acquisition is expected to be immediately accretive to earnings per share, marginally dilutive to EPRA net tangible assets (NTA) per share, broadly LTV neutral and will lower annualised Net Debt to EBITDA.
It added: “Retail parks are affordable (with low occupancy cost ratios), adaptable (with low capex requirements) and easily accessible by the end consumer.”
With this acquisition, retail parks now comprise 32% of British Land’s total portfolio (up from 22% 18 months ago), and further consolidates its position as one of the largest owners and operators of retail parks in the UK.
Simon Carter, chief executive of British Land, said: “The acquisition of this high quality portfolio builds upon our market leading position in retail parks. Parks remain the preferred format for retailers and we have deployed £711m of capital into this subsector since 1 April 2024.”
“These assets offer an attractive yield and strong rental growth prospects in line with our guidance of 3-5%. Combined with the proposed placing, they will be immediately earnings accretive and are expected to deliver double digit ungeared IRRs.
“The broader business also continues to trade well with a good level of leasing in the period and cost discipline underpinning our profit performance. We expect portfolio values to be marginally up for the half year, with continued ERV growth across the portfolio.”
The portfolio
- Elliott’s Field Shopping Park, Rugby (21% of GAV): Well-connected, modern shopping destination, featuring BREEAM ‘Outstanding’ extension, adjacent to A426 dual carriageway. NOI of £6.3m (£23.72 psf) and a WAULT to break and expiry of 3.6 and 5.6 years respectively. The scheme is fully occupied (100%), anchored by M&S.
- Central Retail Park, Falkirk (18% of GAV): Scheme draws on fast-growing local population, at a rate twice the UK average, and dominates its primary catchment. NOI of £5.7m (£14.08 psf) and a WAULT to break and expiry of 6.3 and 7.9 years respectively. The scheme is fully occupied (100%), anchored by both M&S and Tesco.
- Wellington Retail Park, Waterlooville (15% of GAV): At the heart of Waterlooville, the scheme represents the principal retail destination for the town. NOI of £4.1m (£25.55 psf) and a WAULT to break and expiry of 4.7 and 5.4 years respectively. The scheme is virtually fully occupied (99.6%), anchored by M&S.
- Ravenhead Retail Park, St Helens (14% of GAV): Constructed in phases since 2000, presence of premium retailers Nike and Flannels attracts affluent spend. NOI of £3.7m (£12.52 psf) and a WAULT to break and expiry of 4.6 and 6.4 years respectively. The scheme is virtually fully occupied (98.7%), anchored by M&S.
- Cleveland Retail Park, Middlesbrough (12% of GAV): Situated seven minutes’ drive from Middlesbrough city centre, the scheme has a well-established local catchment base. NOI of £4.1m (£13.62 psf) and a WAULT to break and expiry of 3.4 and 4.1 years respectively. The scheme is virtually fully occupied (98.8%), anchored by M&S.
- Telford Forge Shopping Park, Telford (12% of GAV): Scheme is prominently located west of Telford town centre, and immediately adjacent to Junction 5 of the M54. NOI of £3.1m (£10.27 psf) and a WAULT to break and expiry of 5.2 and 5.4 years respectively. The scheme is virtually fully occupied (96.2%), anchored by Sainsbury’s.
- Chilwell Retail Park, Nottingham (8% of GAV): Situated in western suburbs of Nottingham, the scheme draws on affluent catchment populations of Beeston, Long Eaton and Chilwell. NOI of £2.6m (£18.56 psf) and a WAULT to break and expiry of 3.6 and 5.8 years respectively. The scheme is fully occupied (100%), anchored by M&S.
