Landsec reportedly nears £500m Metrocentre deal

Landsec is close to agreeing a deal for Gateshead's Metrocentre at around £500 million, or $674 million, according to The Times, with IREI relaying the report. The figure sits just about where the sellers aimed when they brought the property to market this year.

Metrocentre is one of Europe's largest shopping centres, with more than 300 shops, cafes and restaurants. The seller is the Metrocentre Partnership, whose backers include the Church Commissioners for England and Singapore sovereign wealth fund GIC.

Landsec has competition. Frasers Group and Hammerson are named as rival bidders, and Peel Hunt analysts believe the purchase could go "well in excess" of the asking price.

A purchase would support Landsec's push into retail. The company's portfolio is worth nearly £11 billion, around $14.8 billion, and includes Bluewater in Kent and Liverpool ONE.

The seller line-up adds weight to the number. The Church Commissioners and GIC are the definition of long-dated capital. When institutions like those accept roughly their original asking price on a regional centre, it reads as a cleared price, not a fire-sale number and not an expected-growth number. Institutional sellers do not rush a sale of this size.

The field of buyers backs that reading. A process with three reported bidders is not a distress disposal, whatever the wider mood on UK retail. Peel Hunt's view that Landsec will pay above the asking price fits the same picture: the contest is about owning the asset, not about catching a falling knife.

For Landsec the outlay is meaningful but not frightening — about four and a half percent of the portfolio as reported. The risk in any shopping centre deal is that tenants, footfall and service charges behave. The reported price suggests Landsec has decided Metrocentre's income stream deserves the bet.

Until contracts exchange, the deal is a report. But the asking price, the seller base and the bidding field together give outsiders a rare look at the price at which UK regional retail actually changes hands.