£656m buys a 30% share in Bluewater, Kent for Land Securities

Land Securities has acquired a 30% share in the Bluewater Center based in Kent, from Lend Lease, for a sum of £656m.

It has also gained full management rights, along with 110 acres of land for £40m.  After the rent free periods have ended, the overall net initial yield is expected to be 4.1%. The asset is owned by Lend Lease which holds 25%, M&G Real Estate and GIC with 35%, and Hermes and Aberdeen Asset Management hold a 10% stake.

This is one of the prime shopping centers outside of central London.  It hosts 27m annual visitors, in an extremely wealthy catchment area.  The center offers 1.8m sq ft and houses more than 330 cafes, restaurants, bars, and retailers, including House of Fraser, American Eagle, Tommy Hilfiger, H&M, Zara, Jack Wills, Victoria’s Secret, John Lewis and Marks and Spencer.  It offers shoppers 13000 parking spaces.

The acquisition of this center increases Land Securities’ exposure in the South East.  Purchasing this share forms part of their plans to dominate the retail center experience. The company is planning to improve Bluewater returns by a reduction in the void rate to an average of 2.6% from 5.3%.  It will combine units to offer larger, but fewer units to retailers.  It is also targeting an improvement in its catering and leisure offerings.  

The company is confident that their approach to managing this asset will allow for growth in rentals as confidence in the market resumes again.