Land Securities has acquired a 92% stake in Liverpool ONE, one of the premier shopping centres in the UK, from the Abu Dhabi Investment Authority (ADIA – 69%) and Grosvenor (23%) for an overall consideration of £490m.  

The income return on Landsec’s initial £455m outlay (a payment of £35m to ADIA is deferred for two years) is expected to be 7.5%.

The company said that rental income is expected to grow meaningfully in the coming years, with the centre’s current rental income 4% below ERV.

The acquisition is in line with Landsec’s objective to grow its investment in major retail destinations, recycling the proceeds from its £464m of non-core sales earlier in the year. Landsec will now own and manage seven of the top-30 shopping centres in the UK.

Opened in 2008, Liverpool ONE is one of the most modern major retail destinations in the UK, offering a strong mix of retail, food and beverage, and leisure brands that attract footfall of 22 million people per year. Retail sales have grown by 5% over the past 12 months, with new leases signed 10% above ERV, relettings and renewals 5% above previous passing rent, and overall occupancy of 96%.

The transaction initially adds 2.7 percentage points to the company’s LTV and, upon refinancing the existing secured debt on the asset, is expected to add 1.3p to earnings per share on an annualised basis. 

Mark Allan, chief executive at Landsec said: “The top 1% of the UK’s shopping destinations provide brands with access to 30% of all in-store retail spend, which is why we continue to see brands focus on fewer, but bigger and better stores in the best locations. As such I am delighted that we have added another top-ten centre with a highly attractive return profile – meaning our unique portfolio now includes seven of the top 30 centres in the UK. Liverpool ONE already has a great line-up of brands in a thriving location and we look forward to building on this with our leading operating platform to further add to its exciting growth story.“