Landsec pays £425.6m for 75% stake in MediaCity
Peel L&P will retain a 25% share of the 37-acre Salford mixed-use development but Legal & General has exited the venture.
MediaCity, home to the BBC and ITV, has a gross asset value of £567.5m. Landsec’s £425.6m acquisition comprises £293.6m of debt, reducing Landsec’s equity investment to £207.6m, which is satisfied in cash drawn from existing facilities, the company said.
Under the terms of the deal, the investor will also have an obligation to pay a further amount capped at £15m linked to building remediation works that will be completed post-transaction.
The deal sees the end of Peel L&P and Legal & General’s 50:50 joint venture; the companies have sold 25% and 50% shares to Landsec respectively. Addleshaw Goddard represented Peel and L&G on the deal.
As well as maintaining a 25% stake, Peel L&P will be retained as asset and development manager.
Phase one of MediaCity was completed 10 years ago and comprised 1.48m sq ft across 11 buildings including offices and residential.
The development, home to 2,500 people, is 96% let to a host of media and tech organisations and has a WAULT of just under 10 years.
It generates £31.1m of net operating income a year, reflecting a 5.8% net initial yield.
Phase two has already seen the completion of two residential towers, The Green Rooms and The Lightbox, as well as mixed-use commercial development the Tomorrow building.
This second phase has outline planning consent for an additional 1.6m sq ft including office and residential, with an estimated GDV of £750m, bringing the total space for phase two to 2.3m sq ft.
“In the past 10 years we have created a unique destination, currently unrivalled in the UK for its breadth of offering,” said Steven Underwood, Peel L&P chief executive.
“Our new partnership with Landsec is another exciting step towards our stated vision to double the size of MediaCity.”
Mark Allan, Landsec chief executive, said: “This acquisition presents us with the opportunity to deploy capital immediately into high quality income producing assets and also to invest further over time through the development of phase two.
“MediaCity is a compelling addition to our portfolio, providing the opportunity to invest and further develop the estate with the potential to be onsite from the first half of 2023.”
Wes Erlam, director of urban regeneration at L&G, said: “MediaCity is a successful example of our dynamic approach to recycling profits as we continue to put our capital to work, investing in new projects which are reviving town and city centres across the UK.
“Working in close partnership with Peel since our investment in 2015, we have added more than 600,000 sq ft of built accommodation and are in a position today where MediaCity has welcomed over 2,500 residents and 8,000 workers to this landmark media and tech hub.”
The MediaCity investment follows Landsec’s acquisition of Mayfield developer U+I for £190m.