GlobeSt.com UPDATE: LandSec, Slough Exchange in $1.3B Swap

LONDON-Land Securities and Slough Estates have tied up a euro 998.5-million ($1.3-billion) swap of most of their retail and industrial properties. When completed, Land Securities will own the Howard Centre in Welwyn Garden City, the Lewisham Centre in South London, the Bishop Centre in Taplow and a 50% interest in Buchanan Galleries in Glasgow. The portfolio comprises 91,300 sm of retail and generates euro 29.1 million ($37.7 million) a year in rents.

Slough Estates will increase its industrial portfolio by 300,000 sm through the acquisition of 23 properties, with a rent roll of approximately euro 31.4 million ($40.6 million) including a rental guarantee. Land Securities will retain industrial properties valued at euro 79.9 million ($103.4 million), the majority of which have medium-term potential for development. Slough will also retain its share in shopping centers in York and Surrey Quays, which will be sold in due course.

"A property swap is an effective way to acquire additional retail assets off-market, given our decision earlier this year to focus our activities on sectors where we had market leading positions," says Francis Salway, chief executive of Land Securities. "While the industrial portfolio has performed well, it proved too small to impact substantially on the group's overall performance. We are very pleased with the scope the new assets offer in terms of asset management and development opportunities."

"This swap sharpens our sector focus at a time in the cycle when it is right for us to increase our exposure to industrial property and to prepare ourselves for a possible REIT structure in the next couple of years," adds Ian Coull, chief executive of Slough Estates. "We had an excellent portfolio of retail assets, but it was too small a portfolio to give us meaningful sector diversification. This was a one-off opportunity to acquire a substantial and first-class portfolio of industrial assets."