Land Securities plans to expand its leisure property holdings by acquiring a 42% stake in the X-Leisure fund.
The REIT signed agreements to buy Capital and Regional’s 11.9% stake and AREA Property Partnership’s 30.1% of the £580.6m fund for £109.6m. It also plans to buy the fund’s management company for £1m.
The price represents 34p per unit, compared with the October valuation of 37.3p. If the other unit holders agree, LandSec would gain the majority interest, as it already owns a 12% stake it assembled earlier this year. The company previously tried to buy out Capital and Regional and AREA in 2011.
LandSec director Richard Akers said the deal affirmed its “belief in the attraction of leisure and desire to be responsible for the management of assets where we hold a majority share”.
Based on the £580.6m September valuation and £28m net income from 16 schemes, the initial yield is 6.32%. LandSec has spent £164m this year on UK leisure schemes and bought the Printworks in Manchester last month.
X-Leisure’s other investors, LaSalle Investment Management, SWIP and Royal London Asset Management, will now decide whether to support the bid. The fund is one of a string of UK vehicles coming to the end of their life where some or all of the investors want to exit.