SGS INTU - Comments

SGS INTU Land Securities, the UK listed property Company announced yesterday the purchase of a further 25% stake in Bluewater shopping centre, which is seen as one of the UK’s prime shopping centres. The deal values 100% of the shopping centre at £688m, 70% below the £2.2bn implied by the £656m Landsec paid for a 30% share in 2014. Landsec had written down their share in March, but the announced transaction yesterday is a further 20% lower. The seller, Lendlease, the Australian developer, has been trying to sell it since 2018.

Although the valuation appears low,(price implies an 8.15% initial yield and 8.25% equivalent yield), it is encouraging to see some transactions returning to the market. Earlier this month, there was another transaction, the sale of Silverburn shopping centre in Glasgow. Not surprising, the CEO of LandSec thinks the market is bottoming out and has made it clear he sees opportunities in big shopping centres.