Land Securities Increases Stake in X-Leisure

on Dec 5, 2012

**Major Acquisition in Leisure Property Sector**

The Times reported on 5 December 2012 that UK real estate group Land Securities (LON:LAND) has given a vote of confidence in the leisure sector by purchasing a controlling stake in X-Leisure — the company behind the Xscape and SNO!zone entertainment centres located across the UK.
Land Securities, which already owns a 12 per cent stake in X-Leisure, has agreed to pay a total of £110.6 million to acquire a further 42 per cent share, expanding its holding to 54 per cent, as well as a 100 per cent interest in the separate management company that runs it. Land Securities is buying Capital & Regional’s (LON:CAL) 12 per cent holding in X-Leisure Unit Trust and the 30 per cent stake held by Area Property Partnership. The two former investors in the leisure group are also selling their 50 per cent stakes in the fund’s management company X-Leisure Limited.

The total cash consideration for X-Leisure Unit Trust represents an estimated price per share unit of 34 pence — a slight discount to the fund’s most recent valuation of 37.3 pence per unit from October 2012. Managing director of retail at Land Securities, Richard Akers, said: “While we believe that the offer outlined in today’s announcement represents a good deal for all involved, it is subject to unit-holder and Capital & Regional shareholder approvals so we can have no certainty that the purchase will go ahead.”

!m[UK Real Estate Firm Gives a Vote of Confidence in Entertainment Sector by Purchasing Controlling Stake in Leisure Property Group](/uploads/story/968/thumbs/pic1_inline.png)If approved, however, the acquisition will give Land Securities majority control of a fund with leisure properties valued at £580.6 million and net rental income of £28 million in the nine months to the end of September.

**Buyer Recognises Leisure as Important Part of Property Portfolio**
Through its purchase of a controlling stake in X-Leisure, Land Securities believes that is making an important step in its expansion. According to Mr Akers, leisure continues to be an important element of the company’s portfolio “both organically and through acquisition” and this deal will further increase Land Securities’ reach and expertise in the sector. He said: “Today’s announcement is an affirmation of our belief in the attraction of leisure and of our desire to be responsible for the management of assets where we hold a majority share.”

Land Securities has recently been on a buying spree to increase its exposure to the entertainment property sector. The real estate company acquired its initial 12 per cent stake in X-Leisure last year and in May, the developer snapped up Manchester’s leisure complex ‘The Printworks’ for £95 million as well ‘Cornerhouse’ in Nottingham for £50 million.
Apparently, where Land Securities recognises an attractive opportunity to expand its leisure assets portfolio, an industry peer sees an opportunity to dispose of its non-core assets. Capital & Regional’s chief executive Hugh Scott-Barrett said that the sale of the company’s stake in X-Leisure was “a further important step in the execution of our strategy of selling non-core assets and concentrating on our core UK shopping centre activities”.