Landsec agrees £516m deal to acquire 100% of Metrocentre
The deal, from Tynehawk Holdings (Jersey), follows Land Securities being named as preferred bidder for the shopping centre in July.
The £516m net cash consideration represents an in-place net rental income yield of 7.9%, based on current net rental income of £41m. The deal was brokered by Knight Frank.
Metrocentre, around two miles from Newcastle city centre, attracts more than 16m visitors a year and generates around £650m in retail sales.
The shopping centre comprises 282 stores across 1.86m sq ft of lettable space, alongside an adjacent 200,000 sq ft retail park containing 15 units.
Overall occupancy is 95%, with an average lease term of 4.5 years. Occupiers include Apple, Sephora, Zara, M&S, Bershka, Stradivarius, Next, Lego, Primark, JD Sports, and Lefties.
The acquisition is in line with Landsec’s strategy to invest a further £1bn in major retail assets. Following completion, it will own three of the UK’s top 10 shopping centres and eight of the top 30, with major retail destinations accounting for around 46% of its annualised rental income.
Completion is subject to the dissolution of a legacy entity from the former Intu Properties Group, expected on 9 October, with completion expected by the end of October.
Landsec said trading across its wider portfolio has remained strong, with lettings in the five months to the end of August ahead of estimated rental values and like-for-like net rental income growth expected to be around 3-5% for the year to March 2027.
The acquisition is expected to be funded through an equity issue and existing debt facilities.
The mall sits at the heart of 52 acres of brownfield land, set to be developed into a 4,500-home neighbourhood called Metro Riverside in a partnership between Metrocentre and Gateshead Council.
The government is currently considering the MetroGreen Area Action Plan, which proposes 990 homes around the Metrocentre by 2030 as part of the wider scheme. Supported by Mott MacDonald, Gillespies, and LDA Design, it will be delivered by Metrocentre in partnership with Gateshead Council.
Based on a ’20 minute destination’, which aims to have all residents’ needs located within a 20 minute walk, the carbon neutral district sits three miles from the Newcastle-Gateshead quayside. A ‘reimagined’ Metrocentre will sit at the heart of the neighbourhood, with retail, a hotel, workspaces, and leisure options, as well as the ability to supply renewable energy to residents.
Mark Allan, chief executive of Landsec, commented: “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 vs 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 relettings and renewals having doubled to 15%, and like for like income growth of 5.5% over the full year to March 2026.”
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.
“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.
“We would like to thank everyone who has contributed to Metrocentre’s development over the last six years, particularly our centre team, tenants, customers and Noteholders. With the acquisition expected to complete in late October, we remain fully focussed on ensuring the centre continues to thrive by supporting our tenants and delighting our customers.”
