London & Stamford has recycled the cash it put into Meadowhall with its Joint Venture Partner Green Park Investments and made around £70 million profit, announcing the disposal today to Norges Bank Investment Management, of their 50% stake in the Mall which is now valued at £1.525 billion.
The stake was acquired in February 2009 when the price paid valued Meadowhall at £1.175 billion, and when British Land needed to raise cash urgently. The price struck then clearly represented a bargain to induce LSP to help; now in gaining a long term investment partner British Land is delighted as it will continue to manage the shopping centre.
Chris Grigg, CEO of British Land, said, "We are delighted to be joining forces at Meadowhall with Norges. As one of our largest shareholders and a leading international investor, Norges is an ideal strategic partner for British Land. Norges' investment is a measure of the outstanding quality of Meadowhall and we look forward to working with them to continue to develop its potential in the years to come."
Raymond Mould, Chairman of London & Stamford, said:
"We are delighted to have completed the sale of our interest with Green Park in the Meadowhall Shopping Centre to NBIM.
LSP and its Joint Venture partner will benefit from the additional cash the sale provides ensuring we are poised to take advantage of opportunities in the market which we are confident exist."
The LSP Joint Venture's 50% direct share of Meadowhall represented a £170 million total cash investment of which £47 million was deferred. As part of the sale, deferred payments from the original purchase have been settled and the final purchase price agreed at £152.0 million. LSP's share of this investment in Meadowhall was £47.8 million.
The net proceeds of sale for the Joint Venture's 50% direct share is £307.9 million, generating a profit of £155.9 million. Taken together with income generated for the Joint Venture during the period of ownership of £55.5 million, the total return on equity (excluding fees and after deducting the cost of acquiring surrounding development land and capex) is 129.3%, an equity multiple of 2.29 and an IRR of 32.3%.
The deal represented a big risk for LSP, tying up much of it's cash resources, so now with a warchest of £200 million cash LSP will be able to look at deals up to £1 billion with it's JV partner.