Meadowhall boost for British Land
PROPERTY group British Land has pledged to keep hold of the Meadowhall shopping centre in Sheffield until it can get “fair value” for it.
Last month the group, Britain's second largest property company, saw its shares drop after it pulled the sale of the flagship shopping mall blaming uncertain financial markets.
It had wanted to sell a stake between 50 per cent and 75 per cent in the 1.5 million square foot centre, which is valued at around £1.64bn.
Announcing British Land's half-year results this morning, chief executive Stephen Hester described the failure to sell Meadowhall as a disappointment, saying it was “a victim of adverse investment market conditions”.
He said: “The asset is a resilient one with good customer appeal and disposals elsewhere preclude any need to sell below fair value.”
British Land saw pre-tax profits in the six months to September 30 increase by 10 per cent to £143m. Net asset value per share was unchanged at 1682p with underlying earnings per share up 30 per cent at at 26p.
British Land is working with Sheffield City Council on master-planning for land it owns around Meadowhall to be developed into 1.27m sq ft of offices, flats and houses and car showrooms in a project worth £289m.
British Land gains more than £75m a year in net rental income from Meadowhall, which it bought in 1999. The company put the stake up for sale in February as part of a programme of disposals to reduce debts.
The centre, which first opened in 1990, is home to major retailers including House of Fraser, Debenhams, Marks & Spencer, Next and Primark.
The group's St Stephen's Shopping Centre in Hull, which includes a Tesco Extra, opened in September and is 83 per cent let with negotiations currently taking place on the remaining space. British Land bought the centre before it was built for £135m in 2005 and will complete later this year.
In the last six months British Land has sold £1.9bn of property including the East Kilbride Shopping Centre for £387m, One Exchange Square in Broadgate, London for £400m and industrial property at Cardigan Fields in Leeds for £40m.
Mr Hester said: “We entered the property market correction with significant positives – a strong balance sheet, 100 per cent fixed interest rates, and among the highest occupancy rates and lease lengths in our industry. Customer focus and our activist strategy are helping us outperform at the rental level and we firmly believe that an investment in British Land offers clear value. However, more than one quarter is likely to be needed to complete the market correction which may well be uneven in timing and across participants.”
