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British Land sells Paddington Central stake to Singapore fund for 1% below book value 

Published: 17:32 25 Apr 2022 AEST

British Land Company PLC -

British Land Company PLC (LSE:BLND) has sold a three-quarter stake in its Paddington Central property to Singapore’s sovereign wealth fund GIC for £694mln, or 1% below its book value. 

The FTSE 100 group originally purchased three buildings and a 'cluster' of retail, leisure and developments sites next to Paddington station in 2013 for £470mln, before acquiring the nearby 1 Sheldon Square for £210mln.

Paddington Central will now be owned by a new joint venture company, 75% owned by GIC and 25% by British Land, the second between the two companies following their Broadgate agreement in 2013. 

The UK company will remain asset manager and development manager for future opportunities that include 5 Kingdom St, for which GIC separately has an option to acquire 50% for £68.5mln, ahead of book value. 

Overall, it said the development has delivered an average total property return of 9% per annum since the acquisitions.

"This transaction delivers against one of our key strategic priorities of proactively recycling capital out of mature assets where we have created considerable value," British Land said.

Proceeds will be invested into existing developments across its portfolio as well as "growth areas" such as urban logistics in London and 'innovation campuses'.

Chief executive Simon Carter said the joint venture, the second with GIC, "demonstrates the success of our relationship at Broadgate as well as the quality of the assets and the opportunity at Paddington Central". 

Broker Liberum said: "The transaction is of significant size, representing circa 7% of British Land’s share of total asset base, which we think is a consideration in the sales price." 

The transaction is expected to reduce earnings per share by 1.6p, or around 6% of 2023 estimated EPS, and the company's loan-to-value ratio around 5% before any reinvestment of proceeds.

"The shares trade on a 28% discount to spot NTA, too steep vs the sector at a 13% premium and given a positive outlook for business performance," Liberum added.

 

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