LONDON-A healthy retail market has sparked another merger. Land Securities, Britain's largest property group, has revealed that it is paying euro 538.6 million ($649.3 million) for Lxb, a specialist retail warehouse investor.
Spokespeople for the quoted developer state that the firm has exchanged contracts with Lxb for 14 assets, each of which have retail planning consents with no restriction, known as open A1 consents in the UK. The properties include a 165,000-sf asset in Bracknell and a 150,500-sf property in Chester. Both assets are multi-let retail warehouse parks.
LandSec has also gained ownership of 10 supermarkets and a partnership interest in a joint venture with Deutsche Asset Management, which owns two retail parks at Crayford, Greater London, and Strood, Kent. The retail warehouses produce rents of euro 9.4 million ($11.3 million) a year, while the supermarket assets produce euro 13.5 million ($16.2 million) a year.
"We believe that certain segments of the out-of-town retail market, particularly supermarkets and open A1 parks, will deliver the strongest growth, and it is exactly these areas of the retail market that we are capturing through this acquisition," says Francis Salway, Land Securities' chief executive.
Shares in the company, which have rallied from a low 679p two years ago, were up 6p at 1,448p in early trading. While the group, like others in the sector, has struggled with its office portfolio, the strength of the retail and shopping center assets has helped to mitigate a sharp decline in the Central London office market, which is now showing signs of recovery.
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