Landsec has exchanged contracts to acquire the Metrocentre in Gateshead for £516m, in a deal that will give the company ownership of three of the UK's ten largest shopping centres.
The shopping and leisure destination, which opened 40 years ago, was put up for sale in June with a reported price of £500m. It has been operated by Sovereign Centros since 2020, when former owners Intu went into administration. Mike Ashley's Frasers Group was understood to be among the early frontrunners, but Land Securities was later reported to be the preferred bidder.
The sale is being made by Tynehawk Holdings (Jersey) Limited, and the new owners will finance the deal in part with a share offer on the London Stock Exchange.
Significant step forward
Martin Healy, chairman of Metrocentre, said: "The proposed sale of Metrocentre to Land Securities will be a significant step forward for the centre and a positive outcome for all of Metrocentre's stakeholders, recognising the strength of Metrocentre as a top 10 retail and leisure destination in the UK, following a sustained investment programme."
He added: "Once completed, it will see Metrocentre join a market leading operator with an excellent track record of owning and operating many of the country's top retail and leisure destinations. Land Securities' experience, scale and commitment to developing major retail destinations make it especially well placed to support Metrocentre through its next phase of development and growth."
History and performance
The Metrocentre first opened in 1986, when property developer and former Newcastle United owner Sir John Hall worked with Church Commissioners to convert a former power station ash dump into one of the biggest shopping, entertainment and hospitality complexes in Europe. At the time, it was one of the UK's first out-of-town shopping malls.
The centre currently has an occupancy rate of 95% and total annual sales of around £650m. Landsec says the deal will give it ownership of three of the country's largest ten shopping centres, alongside Liverpool One, Bluewater in Kent and St David's in Cardiff.
Landsec's strategy
Mark Allan, chief executive officer of Landsec, said: "Growing our investment in major retail destinations remains our highest conviction call, given the high income yields and attractive income growth on offer for the right assets."
He added: "Our acquisition of Metrocentre represents a rare opportunity to obtain 100% control of a top-10 UK shopping centre. Metrocentre offers the scale, relevance and quality of catchment where demand from brands is highest, as they focus on fewer, bigger, better stores in the strongest locations. This established trend remains clear, with retail sales across our existing major retail platform up 26% since March 2022 vs 1% for the average UK market, and footfall continuing to gain market share."
The acquisition is expected to complete in late October.
