Landsec, the leading UK REIT, has bought an additional 17.5% stake in the Bluewater shopping centre in Kent from Singaporean sovereign wealth fund GIC for £120 million.
The acquisition increases its ownership in one of the UK's largest retail destinations to 66.25%.
In a stock market announcement, the REIT said that based on the income its existing investment in Bluewater generated over the year to March 2024, the acquisition increases the company's net rental income by £10.3 million on an annualised basis.
It said the transaction is in line with Landsec's objective to grow its investment in major retail destinations, recycling capital from its recent non-core disposals in an earnings-accretive way.
It had recently been pursuing talks to take a major stake in Liverpool's Liverpool One shopping centre, as revealed by CoStar News, before those talks ended earlier this year.
In its most recent results, Landsec said it was putting prime retail top of its list as it nears the end of a £4 billion disposal programme and focuses on acquisitions.
In full-year results to the end of March 2024, the REIT said around 60% of its near £10 billion portfolio is no longer reporting value falls, notably West End offices and prime retail assets, while a period of disposals and strong rental growth means it has £1 billion set aside to invest in its committed development pipeline and new acquisitions in the next 12 months.
Bruce Findlay, managing director – retail at Landsec, said in a statement: "This transaction underscores our ability to continue to create value through prime investments in scarce, major retail destinations with attractive return profiles. Bluewater is one of the UK's top retail destinations and a key part of our strategy to further build our relationships with key brands."
As Landsec focuses on investing in prime retail it has been increasing its ownership of malls it already part-owns. In 2021 Landsec bought an additional 25% share in Bluewater from Lendlease Retail Partnership for £172 million representing a net initial yield of 8.15%. More recently it increased its stake in the St David's centre in Cardiff.
Located in northwest Kent, around 23 miles east of central London, the 1.9-million-square-foot Bluewater is one of the UK's largest out-of-town shopping centres and the largest of its kind in the South East. It is home to brands including Apple, John Lewis, Marks & Spencer, Primark and Zara alongside a 13-screen Showcase Cinema.
M&G Real Estate with 23.75%, Royal London with 7.5% and Schroders with 2.5% are the remaining stakeholders in the centre.
The acquisition is close to being the largest retail investment in the UK this year.
In May British Land exchanged contracts for the sale of its 50% stake in Meadowhall Shopping Centre in Sheffield to its partner Norges Bank Investment Management, the Norwegian sovereign wealth fund, for £360 million.
The next largest acquisition in the sector has seen M&G Investments buy 11 Waitrose supermarkets for £125 million. The largest other shopping centre acquisition has seen Lone Star buy Union Square in Aberdeen for £111 million, reflecting a net initial yield of 11%.
Retail investment remained stable at nearly £1 billion, in line with the previous quarter, but 49% below its five-year quarterly average in the first quarter according to Carter Jonas.