Landsec has completed the acquisition of the Metrocentre in Gateshead for £516m.
Based on net rental income of £41m, the net cash consideration of £516m implies an in-place net rental income yield of 7.9%. Landsec expects this yield to improve by circa 40bps in the short term due to the efficiencies of integrating the asset into its own operating platform.
The company said the shopping centre “offers an attractive combination of a high day-one income return, strong future rental growth prospects and an expected low double-digit unlevered IRR”.
Earlier this month, Landsec announced it had exchanged contract to purchase the 2m sq ft shopping centre from the Metrocentre Partnership, a group of investors who picked up the asset following the collapse of Intu.
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. 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 versus 1% for the average UK market, and footfall continuing to gain market share.
“In this context, Metrocentre is exactly the type of destination where our market leading platform can unlock further income and value growth. Our track record in this is proven, with occupancy across our existing major retail portfolio up to a two decade high, rental uplifts on re-lettings and renewals having doubled to 15%, and like-for-like income growth of 5.5% over the full year to March 2026.”
