Aim-traded property recovery fund (L&S) has acquired a 50 per cent stake in largest shopping centre, Meadowhall in Sheffield, for £588m. The deal is expected to generate a 12 per cent cash-on-cash return for L&S shareholders.
The timing of the deal and the way it has been structured shows the nous of property veterans Patrick Vaughan and Raymond Mould, who run L&S. First, they played the waiting game - the Meadowhall stake was on the market for nearly £300m more in 2007.
Second, by forming a partnership with British Land, L&S and its joint-venture partner Cavendish (an Abu Dhabi sovereign wealth fund) have cleverly accessed the existing debt financing on the centre. This is in the form of a 4.98 per cent non-recourse fixed-rate bond, which still has 23 years to run.
L&S and Cavendish will sink £170m of equity into the deal, including a deferred payment based on Meadowhall achieving additional income from identified new lettings.
When: 17 Dec 2008
Price: 87.5p
