British Land shelves Meadowhall mall stake sale-sources

LONDON, Sept 20 Thu Sep 20, 2012 5:09pm IST

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LONDON, Sept 20 (Reuters) - British Land has shelved plans to sell part of its stake in the Meadowhall shopping mall in Sheffield, opting instead to retain its full 50 percent because of the centre's strong performance over the past year, two sources familiar with the deal said.

British Land had put the holding up for sale to capitalise on strong demand for shopping mall assets, but has instead opted to form an equal partnership with Norway's sovereign wealth fund which is buying half of the centre.

British Land co-owns the 1.4 million sq foot mall with property company London & Stamford and had put a 25 percent share up for sale alongside the latter's quest for a buyer.

Norway's $610 billion sovereign wealth fund, the world's second-largest after the Abu Dhabi Investment Authority, is in exclusive talks to buy London & Stamford's entire 50 percent stake for about 750 million pounds ($1.2 billion).

This would be the Norwegian group's second UK property investment since it invested 448 million pounds into London's Regent Street in 2010.

British Land, the Norwegian group and London & Stamford declined to comment. The sovereign wealth fund and London & Stamford are likely to exchange on the deal within the next week, one source said.

Large UK shopping centres like Meadowhall which dominate their catchment area are highly sought after by investors as they have weathered the tough retailing climate relatively well.

Meadowhall, British Land's second-most valuable property after the Broadgate complex in the City of London financial district, has an occupancy rate of 97.4 percent and produces an annual rent roll of 83 million pounds, the company said in May.

British Land bought Meadowhall in 1999 for 1.17 billion pounds and sold a 50 percent stake to London & Stamford and a Middle Eastern partner for 588 million pounds in 2009.