February 11, 2013 8:04 pm

British Land invests in retail properties

British Land has bought a portfolio of retail properties, including a London shopping mall, in a £184m deal that takes the UK’s second-largest property company by market value closer to becoming a retail and London office specialist.

The centrepiece of the portfolio, which was put up for sale last year by Dutch fund manager Wereldhave, is Ealing Broadway Shopping Centre, a 300,000 sq ft mall situated close to one of the stations being constructed for the Crossrail route.

The acquisition marks an advance in British Land’s stated target of becoming more specialised in retail and London office properties, while retrenching from other markets. The move comes amid a wider shift among the UK’s largest listed property companies to become specialist Reits, or real estate investment trusts, rather than operating across a range of sub-sectors.

Charles Maudsley, head of retail at British Land, said there were “significant opportunities to grow and develop the shopping centre . . . as the area benefits from residential development and the completion of Crossrail.”

The Ealing mall, whose tenants include Primark, Marks and Spencer and Tesco, has about 15m visitors a year and is being acquired on an initial net yield of 6.9 per cent.

Wereldhave bought the property in November 2011 and is taking a £13m loss on the sale. The Dutch group, whose boss resigned last year after a profit warning, is in the process of exiting the UK property market.

So-called second-tier London shopping malls have suffered during the financial crisis as shoppers have migrated to a handful of larger retail centres, such as the Westfield malls in Stratford and Shepherds Bush. Last month, Westfield announced a £1bn joint venture project with Hammerson, the UK retail property landlord, to develop a 2m sq ft mall in Croydon.

The other assets in the British Land deal, all smaller, include properties on Baker Street, Chiswick High Road and Fulham Road.

The acquisition is part of a long-running programme by British Land to reshape its £10.4bn portfolio. In September, the group sold off £120m worth of supermarkets to raise capital for its £2bn pipeline of projects.

As well as significant retail holdings – British Land is the largest owner of supermarket space in the UK after the four big food retailers – the company is building a skyscraper in the City of London.

Jackson Criss and Strutt & Parker acted for British Land.

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