Norwegians Acquire 50 Percent Stake in Regional UK Mall

on Oct 10, 2012

**50% of Sheffield Mall Bought for £348 million**

On 9 October 2012, The Times reported that the Norwegian government pension fund bought a 50 percent stake in the Meadowhall Shopping Centre in South Yorkshire. Norges Bank, which manages the fund, entered into a joint venture with the real estate investment trust British Land (LON:BLND), which owns the other half of the mall.
Norges Bank announced in a statement that it had purchased the 50 percent stake for £348 million, or approximately 3.2 billion Norwegian kroner from a joint venture between from the London-listed property investment company London & Stamford Property (LON:LSP), and the Middle Eastern investment group Green Park Investments. The transaction, which was completed on October 6, values the Sheffield Centre at £1,525 billion pounds, including debt.

**“Super-Regional” Mall with 24 Million Shoppers**
The Times reports that the Norwegian Fund was attracted to the Meadowhall mall because it is one of the few super-regional centres in Britain, with more than 24 million shoppers a year. “The purchase gives us exposure to one of the largest and most dominant shopping centres in the UK,” notes Karsten Kallevig, real estate chief investment officer at Norges Bank Investment Management. The mall is located about 5 kilometres north east of Sheffield city centre and contains 141,000 square metres of rentable retail space over two levels. The new agreement also includes 74 acres of adjoining development land.

!m[Norges Bank Partners Up With British Land For The Meadowhall Shopping Centre](/uploads/story/549/thumbs/pic1_inline.png)Norges Bank’s partner in the venture, British Land, had been considering selling half of its stake in the mall to Norges Bank but decided against it. “Norges’ investment is a measure of the outstanding quality of Meadowhall, and we look forward to working with them to continue to develop its potential in the years to come,” commented British Land’s CEO Chris Crigg, as quoted by the Financial Times. In addition, British Land will continue to manage the shopping centre for a fee.

**Record Foreign Investment in British Property**
The transaction, which took more than a year to complete, is indicative of the health of UK shopping centres, the Financial Times recently reported. “It demonstrates that stakes in shopping centres aren’t liquid in their own right which is useful for the rest of the sector [to know],” pointed out Robert Duncan, an analyst at Jefferies (NYSE:JEF).

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The deal, however, comes at a time of record foreign investment in British property. The Times quotes data from the property consultant DTZ (LON:DTZ) showing that foreign purchases of commercial property in the UK reached £8.1 billion in the first half of 2012, or an 80 percent increase relative to the same period in 2011.
The Meadowhall shopping centre is the Norwegian fund’s second acquisition in the UK, with Bloomberg reporting that in November 2010, the fund purchased a 25 percent stake in London’s Regent Street for £448 million. The Norwegian government fund, which invests Norway’s surplus from its oil reserves, got the green light from the Norwegian finance ministry to start investing in real estate in 2010. Since then, it has also acquired properties in Paris and plans to make real estate investments in the US by the end of next year.

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