Landsec acquires £425.6m majority stake in MediaCity
Landsec has acquired a majority stake in MediaCity and will pay £425.6m for the 75% interest for the 37-acre media, digital and tech hub.
The site was previously owned by a 50:50 JV between Legal & General and Peel L&P.
Landsec will partner with Peel L&P who will retain a 25% stake and continue to serve as asset and development manager.
MediaCity has a gross asset value of £567.5m.
Landsec £425.6m transaction includes £293.6m of debt (£220.2m on a proportionate basis), reducing Landsec’s equity investment to £207.6m which is satisfied in cash drawn from existing facilities.
Landsec will also have an obligation to pay a further amount capped at £15m linked to building remediation works which will be completed post-transaction.
The Salford waterside destination is home to some of the world’s most exciting creative, tech and media brands, from BBC North and ITV to Ericsson, The Hut Group, Kellogg’s and over 250 creative and tech businesses as well as schools and universities.
The biggest tech and media hub outside London, MediaCity produces 50,000 hours of content every year, and is home to 8,000 residents and workers.
Phase one was completed 10 years ago and comprises 1.48m sq ft across 11 buildings including work space, studios, incubator labs, residential as well as ancillary leisure and retail.
It is 96% let with a WAULT of just under 10 years.
It generates £31.1m of net operating income per annum (100%), reflecting a 5.8% net initial yield. Over half of the income has rent reviews linked to RPI, with collars and caps guaranteeing future rental uplifts.
Phase two has already seen the completion of two residential towers – ‘The Green Rooms’ and ‘The Lightbox’ as well as the award-winning mixed-use commercial space, the ‘Tomorrow building’.
This second phase has outline planning consent for an additional 1.6m sq ft including office and residential, with an estimated Gross Development Value (GDV) of £750m, bringing the total space for phase two to 2.3m sq ft,.
Mark Allan, Landsec CEO said: “This acquisition presents us with the opportunity to deploy capital immediately into high quality income producing assets and also to invest further over time through the development of phase two.
“MediaCity is a compelling addition to our portfolio, providing the opportunity to invest and further develop the estate with the potential to be onsite from the first half of 2023. I’m particularly excited to be able to work alongside Peel, whose experience and expertise complements our own.”
Steven Underwood, Peel L&P CEO said: “Our new partnership with Landsec is another exciting step towards our stated vision to double the size of MediaCity. As MediaCity enters its 11th year we look forward to working alongside Landsec whose ethos and vision are aligned with ours, to deliver MediaCity’s global potential benefitting all MediaCity’s local, regional and national stakeholders.”
Wes Erlam, Director of Urban Regeneration, L&G: “As MediaCity now reaches its next stage of maturity, this sale enables us to release growth capital for deployment into new opportunities, as we continue to identify early stage projects and ventures where we can create significant value.”
The deal is part of Landsec’s strategy to invest in more towns and cities outside of the capital. It announced this week it was acquiring regeneration company U+I for £190m.
A team from Addleshaw Goddard, led by Shelley McGivern and Cathy Fearnhead advised Peel and Legal & General.
International law firm CMS has advised Landsec on its acquisition.
The CMS team was led by John Cumpson, Victoria Henry and Mark Haywood, and included Laurence Isaac and Ellie Mends (FIRA); Chris Hallam, Catherine Gelder and David Young (Construction); Chris Bowes (Planning); Phil Anderson and Phil Nicklin (Tax); Dave Lawson, Erin Goodall, Jack Brigden and Rosalind Hill (Real Estate).
