London & Stamford (LSP) has finally sold its stake in Meadowhall to the Norwegian sovereign wealth fund - nearly nine months after it first appointed Savills (SVS) to put the huge Sheffield shopping centre on the market. The delay, which is virtually unprecedented in the property industry, had caused some speculation that Meadowhall would fetch an underwhelming price. But the deal announced this morning prices it at £1.525bn - slightly more than analysts expected.
London & Stamford, alongside its Middle East equity partner Green Park, bought half the mall from British Land (BLND) in February 2009, the very darkest hour of the banking crisis. Valuing Meadowhall at £1.175bn, the deal secured London & Stamford’s reputation for astute opportunism on the grandest scale. The company invested £48m of cash in the mall, and has now extracted £97m. Including income, it has achieved a return on equity of 129 per cent.
If the 2009 deal was a coup for London & Stamford, it was an embarrassment for British Land - and something of that embarrassment has lingered into 2012. It was widely reported in February that the company wanted to sell half its 50 per cent stake alongside London & Stamford and Green Park’s. But in the end the Norwegian sovereign wealth fund only wanted half the centre, so British Land was left with the same stake as before. Throughout the sales process, the UK real-estate investment trust has given every impression of being guided by the strategies of London & Stamford and Norway rather than by its own.
“If British Land likes the centre, why didn’t it buy out London & Stamford? If it doesn’t like it, why doesn’t it sell?” says one property fund manager.
British Land has made two major retail disposals within the last two weeks, presumably to replace the cash it once expected for Meadowhall. First it announced the sale of various supermarkets for £118m to institutional investors and Sainsbury’s as an owner occupier. Then it sold a retail park in Cambridge called the Beehive Centre.
