Fri. Jan 21st, 2022

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Landsec has acquired a majority stake in MediaCity and will pay £ 425.6 million. for the 75% share in the 37-hectare media, digital and technology hub.

The site was previously owned by a 50:50 JV between Legal & General and Peel L&P.

Landsec will enter into a partnership with Peel L&P, which will retain a 25% ownership interest and continue to act as asset and development manager.

MediaCity has a gross asset value of £ 567.5 million.

The Landsec £ 425.6m transaction includes £ 293.6m of debt (£ 220.2m on a pro rata basis), reducing Landsec’s equity investment to £ 207.6m, which is met in cash drawn from existing facilities.

Landsec will also have an obligation to pay an additional amount limited to £ 15m. linked to building redevelopment work, which will be completed after the transaction.

The waterfront destination in Salford is home to some of the world’s most exciting creative, technological and media brands, from BBC North and ITV to Ericsson, The Hut Group, Kellogg’s and over 250 creative and technological companies as well as schools and universities.

MediaCity is the largest technology and media hub outside London, producing 50,000 hours of content each year and home to 8,000 residents and workers.

Phase 1 was completed 10 years ago and comprises 1.48m sq ft across 11 buildings, including workplaces, studios, incubator laboratories, housing as well as associated leisure and retail.

It is 96% rented with a WAULT of almost 10 years.

It generates £ 31.1 million. of net operating income per year (100%), reflecting a net start-up return of 5.8%. Over half of the income has rental appraisals linked to RPI, with collars and caps guaranteeing future rent increases.

Phase two has already seen the completion of two residential towers – ‘The Green Rooms’ and ‘The Lightbox’ as well as the award-winning mixed commercial space, ‘Tomorrow building’.

This second phase has outlined planning permission for an additional 1.6 m sq ft including office and residential, with an estimated gross development value (GDV) of £ 750m, bringing the total space for phase two to 2.3 m sq ft.

Mark Allan, Landsec CEO said: “This acquisition gives us the opportunity to immediately use capital for high quality income producing assets and also to invest further over time through the development of Phase Two.

“MediaCity is a compelling addition to our portfolio that provides the opportunity to invest and further develop property with the potential to be on site from the first half of 2023. I am particularly excited to work with Peel, whose experience and expertise complement ours. own.”

Steven Underwood, Peel L&P CEO said: “Our new partnership with Landsec is another exciting step towards our stated vision of doubling MediaCity’s size. As MediaCity enters its 10thth This year, we look forward to working with Landsec, whose ethos and vision are in line with ours, to deliver MediaCity’s global potential for the benefit of all of MediaCity’s local, regional and national stakeholders. ”

Wes Erlam, Director of Urban Regeneration, L&G: “As MediaCity now reaches its next stage of maturity, this sale enables us to release growth capital for implementation in new opportunities as we continue to identify early projects and ventures where we can create significant value.”

The deal is part of Landsec’s strategy of investing in more cities outside the capital. It announced this week that it would buy the regeneration company U + I for £ 190 million.

By Victor

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