Liberty International Plc sold 40 percent of its stake in MetroCentre, Europe's largest covered leisure and retail complex, to the Singapore government for 426 million pounds ($822 million) in cash to finance other projects.
Liberty, the U.K.'s largest owner of shopping centers, bought MetroCentre in 1995, the London-based company said today in a statement. The mall, near Newcastle in north England, attracts about 24 million visitors a year to its 339 stores and other outlets, which have total floor space of 1.8 million square feet.
Liberty, whose Capital Shopping Centres unit owns 90 percent of MetroCentre, sold the stake at a premium to its valuation at the end of 2006, allaying concerns retail property prices would fall because of a slowdown in consumer spending in the U.K.
``It shows that for high quality assets, there is strong demand in the market place,'' said Ben Ritchie, who helps oversee more than $6 billion of stocks at Aberdeen Asset Management Plc, including Liberty shares. ``It's a sensible strategy and gives Liberty a decent amount of firepower for other projects.''
CSC owns a series of 200-year leases in the mall bought from the Church Commissioners who are responsible for the Church of England's pension fund, one of the best-performing U.K. retirement plans over the past decade.
The sale price values CSC's stake at 1.065 billion pounds, 3.9 percent more than the 1.025 billion-pound valuation at the end of 2006, Liberty said in the statement.
The Singapore government will make the acquisition through GIC Real Estate, its property unit. GIC Real Estate will own 36 percent of the MetroCentre.
``This investment is an excellent addition to our global portfolio of retail properties'' Seek Ngee Huat, president of GIC Real Estate, said in the statement. GIC has stakes in other malls in the U.K. Italy, Malaysia and Australia.
CSC will continue to manage the mall and the joint venture will assume existing debt of 587 million pounds of commercial mortgage-backed securities that mature in 2015.
``We are delighted to welcome GIC Real Estate as a strategic long term partner in one of our flagship assets,'' Liberty Chairman Robert Finch said in the statement. ``The proceeds of this transaction will enable Liberty to continue to expand its overall business which includes a 1 billion-pound development program.''
MetroCentre accounted for 46.7 million pounds of Liberty's rental income last year. Liberty also owns Lakeside in Thurrock, an out-of-town shopping mall in southern England, and last year bought Covent Garden, one of the main destinations for tourists and shoppers in London's West End district.
Shares of Liberty fell 21 pence, or 1.7 percent, to 1,195 pence in London. The stock has climbed 8 percent in the past 12 months, while the FTSE 350 Real Estate Index has advanced 22 percent.
Morgan Stanley advised Liberty, and Cushman & Wakefield Inc. advised GIC Real Estate.