Landsec has completed its acquisition of a 92% stake in Liverpool One, one of the premier shopping centres in the UK, from a wholly owned subsidiary of the Abu Dhabi Investment Authority (69%) and Grosvenor (23%) for £490 million in a landmark transaction revealed by CoStar News.
In a stock market announcement confirming the transaction, Landsec said of the total consideration a payment of £35 million to ADIA is deferred for two years. The income return on Landsec's initial £455 million outlay is expected to be 7.5%.
Landsec said the centre's rental income is 4% below estimated rental value, so "combined with the benefits of Landsec's leading operating platform, strong brand relationships and further ERV growth, rental income is expected to grow meaningfully in the coming years".
The real estate investment trust added that the acquisition is in line with its objective to grow its investment in major retail destinations, recycling the proceeds from its £464 million of non-core sales earlier in the year. Landsec will now own and manage seven of the top 30 shopping centres in the UK. It says this provides brands and visitors with a "unique portfolio of regionally dominant, urban retail and leisure destinations".
Opened in 2008, Liverpool One is one of the most modern major retail destinations in the UK, offering retail, food and beverage, and leisure brands that attract footfall of 22 million people per year. Landsec said retail sales have grown by 5% over the past 12 months, with new leases signed 10% above ERV, relettings and renewals 5% above previous passing rent, and overall occupancy of 96%.
It says the mall is well-placed to benefit from the continued focus on fewer, bigger and better stores from key brands, further exemplified by recent upsizes and new lettings with M&S, Sephora, Uniqlo and Zara.
The transaction includes some performance-related overage provisions with ADIA. Including this, Landsec expects its investment to deliver an unlevered internal rate of return in line with the guidance it provided at its recent half-year results.
The remaining 8% is held by a private family.
Mark Allan, chief executive officer at Landsec, said: "The top 1% of the UK's shopping destinations provide brands with access to 30% of all in-store retail spend, which is why we continue to see brands focus on fewer, but bigger and better stores in the best locations. As such I am delighted that we have added another top-10 centre with a highly attractive return profile – meaning our unique portfolio now includes seven of the top 30 centres in the UK. Liverpool One already has a great line-up of brands in a thriving location and we look forward to building on this with our leading operating platform to further add to its exciting growth story."
James Raynor, chief executive, Grosvenor Property UK, added: "Liverpool ONE is a phenomenal destination and we're incredibly proud of what we've accomplished with and for the City over the last 25 years. It's not only one of the most remarkable regeneration stories, re-defining what long-term investment and partnership can achieve, it continues to be one of the UK's most successful retail and leisure destinations. And, under the unified ownership and management of Landsec, we know it will continue to thrive.
"Looking ahead, we have ambitious plans to grow and diversify the business and we will reinvest the proceeds from the sale in our core portfolio including our 10-year programme of investment in London and residential debt business, which has supported the delivery of 3,370 homes in just two years."
ADIA appointed JLL last year to seek a buyer for its stake in the 1.6 million-square-foot mall. According to the most recent valuation at the time, the centre was valued at around £520 million. CoStar News then revealed that Landsec was leading the parties expressing interest in the stake with a bid at around £350 million representing a circa 8% yield. By March of this year, it was widely reported that the talks had ended.
Last month CoStar News revealed Landsec had returned to talks to buy the ADIA stake but was also in talks to buy the stake held by the Duke of Westminster's property Grosvenor in what would be one of the largest UK shopping centre transactions in years.
Grosvenor, which developed the mall, held its stake in its Grosvenor Liverpool Fund and manages the site.
Liverpool One has more than 200 shops, more than 500 apartments, two hotels, 25 restaurants, a 14-screen Odeon cinema, four office buildings, a five-acre public park, 2,000 car parking spaces and a public transport interchange.
For a review of Grosvenor's challenging but ultimately successful development of Liverpool One, which opened in 2008 as the global financial crisis got under way, click here.
Landsec has been pressing on with a strategy to sell around £4 billion of mature assets and assets in sectors its sees as non-core, such as retail parks and leisure as well as some London offices. It is reinvesting in growth opportunities, which include its pipeline of London offices and major retail. It has sold around £2 billion over the past two years.
Analysts at JP Morgan this morning wrote: "In what we see as a welcome, but perhaps not-so-surprising announcement – given this transaction was rumoured to be in the works in November (source: CoStar) - Landsec has executed on its strategy to “expand” its retail portfolio in 2H25 that will support earnings per share in 2026."