AXA in talks for 25% £500m-plus Bluewater stake

By Paul Norman - Tuesday, January 09, 2018 9:17

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AXA SA’s investment management unit is in talks to buy a 25% stake in the Bluewater shopping centre in Kent from LendLease.

Bloomberg reported that AXA is in talks to buy the stake in the super-prime regional centre yesterday in a move that means it is not taking up an opportunity to buy a larger joint stake between Lendlease and GIC.

CoStar News reported in October that Lendlease had teamed up with GIC in October to formally launch the sale of their stakes in Bluewater shopping centre in Kent for £870m, reflecting a circa 4.5% yield.

The pair began approaching international investors offering their stakes either as a combined 42.5% share at circa £870m, or two smaller shares at 25% (£510m) and 17.5% (£360m) respectively, market sources said.

The anticipated sale came after Royal London bought Hermes’ 7.5% stake in the shopping centre for £155m in September, as revealed by CoStar News. Lendlease, advised by Macquarie, followed Hermes in June in deciding to sell its interest, then valued at £600m, due to a wind down of its closed-ended fund, Lendlease Retail LP.

GIC followed suit, with Knight Frank hired to find a new investor to take its place. However this is the first time the Singaporean wealth fund has formally offered its piece and that the two pieces have been sold together.

That revised pricing was broadly in line with the Royal London purchase and shows a movement from peak valuation levels earlier in 2017.

LandSec, which owns the remaining 30% share in the shopping centre as well as the management rights, is understood to be involved in the sales process.

Opened in 1999, Bluewater is one of the UK’s biggest shopping centres and is home to over 330 retailers, cafes, bars and restaurants, including John Lewis, House of Fraser, Marks and Spencer, American Eagle, Victoria’s Secret, Tommy Hilfiger, Jack Wills, H&M and Zara.

It attracts 27m visitors a year and has a catchment of 6.6m people, one of the most affluent in the country, with the highest spend per group of £191m.

The sale of Bluewater is being closely watched by the market after a subdued 2017 for investment activity due to wider political and economic uncertainty, together with wider structural issues facing the retail sector due to changing shopping habits.

Investment into UK shopping centres totalled £1.673bn in 2017, down 44% on the 2016 total of £3bn, reports Savills.

A joint sale by Lendlease and GIC would be the largest transaction in the shopping centre market since intu, then known as Capital Shopping Centres (CSC), acquired the Trafford Centre for £1.6bn from The Peel Group, which received an equivalent 23% share in CSC as part of the deal.

Prior to this, the largest deal was in 2010 when Westfield sold a 50% stake in Stratford City shopping centre for £871m to a joint venture between CPPIB and APG.

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