Land Securities Group PLC on Tuesday said it has struck a deal to take sole ownership of a shopping centre in Wales, and the property company added that demand in central London has been ‘strong’.

Landsec purchased 50% of the St David’s shopping centre in Cardiff. It did it through the purchase of debt secured against the 50% holding that was once owned by Intu Properties PLC, which went into administration in 2020. It means the Landsec now has 100% ownership of the asset.

‘Comprising separate transactions with two debt holders, the overall purchase price represents a meaningful discount to the £113 million September 2022 book value of Landsec’s existing 50% share of the centre, a net initial yield of 9.7% and an equivalent yield of 9.7%,’ the company said.

It said that ‘leasing momentum in St David’s has been strong’. Since March last year, 36 leases have been struck ‘or are in solicitors hands’. The deals have been sealed at an average of 11% ahead of estimated rental value.

Landsec added: ‘In the last 18 months, several brands have relocated to St David’s from elsewhere in the city, agreed to open new stores, or upsized their existing stores, including Zara, Ivy Asia, Gaucho and Footasylum. As a result, occupancy increased from 88.1% in March 2021 to 93.1% at the start of this year, with retail sales for the financial year to date 15% above the prior year and in-line with pre-pandemic levels.’

The company noted that for a ‘minimal sum’, it also acquired a vacant site adjacent to the asset, which once belonged to department store Debenhams.

In London, Landsec said it sold a fully-let leisure asset in north London, as well as a small non-core residential asset. This is in addition to the £350 million disposal of central London-located One New Street Square to Hong Kong-based Chinachem Group announced in January.

‘Operational momentum has remained positive across Landsec’s Central London portfolio and major retail destinations, as customer demand continues to focus on best-in-class space. In Central London, the strong demand for sustainable, modern space means that Landsec’s two largest on-site development schemes, n2 and Lucent, are now 66% and 67% pre-let or in solicitors hands respectively,’ Landsec said.

‘As a result, its overall current pipeline is now 53% pre-let or in solicitors hands, ahead of its completion by the summer, up from 38% in November, with rents agreed since the half year well ahead of estimated rental value.’

The company added that in the 11 months to February, like-for-like sales across its retail destinations were 3% ahead of pre-Covid levels.

Chief Executive Mark Allan said: ‘We continue to believe that interesting opportunities will emerge as the economy transitions to a higher interest rate environment and have positioned the business to be able to respond accordingly.’

Landsec shares traded 0.4% higher at 577.80 pence each in London on Tuesday morning.

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