Sunday 13 October 2019 4:28 pm

Property giant Land Securities eyes £650m sale to fund real estate expansion

Property giant Land Securities is reportedly close to selling a £650m stake in a leisure portfolio to private equity property investor CIT Partners.

Land Securities is understood to have agreed to sell its 95 per cent share of the X-Leisure Unit Trust – which is behind developments including Xscape Milton Keynes and Brighton Marina – to CIT, The Sunday Times reported.

Read more: London house prices suffer steepest fall since financial crisis

Chief executive Rob Noel, who is due to step down from the company next year, is reportedly keen to expand Land Securities’ presence in the London real estate market as the retail and leisure revenues continue to struggle.

A supply-starved office space market in London has led to vacancy rates falling to their lowest level since 2007 over the past year, a recent report found.

This lack of supply has driven up rents as occupiers compete over a smaller pool of properties, with prime rents in the West End – London’s most expensive region – climbing seven per cent to £107 per square foot.

London offices already make up almost half of Land Securities’ £11.7bn property portfolio, while the company also owns shopping centres including Bluewater in Kent and Gunwharf Quays in Portsmouth.

Land Securities had built up its stake in X-Leisure gradually, spending £110.6m on a 42 per cent stake in 2021, and £104m on a further 35.6 stake.

X-Leisure was created when Capital & Regional merged three property funds in 2004, and later acquired the Xscape centres – two large leisure developments in Milton Keynes and Castleford in Yorkshire.

CIT Partners are a private equity real estate group focused on investments in London. The firm has over £2bn of assets under management, and recent developments include the 41-storey South Bank Tower.

Land Securities declined to comment on the reports. CIT Partners did not respond to a request for comment.

Read more: M&G Prudential backs London with £875m investment in City skyscraper

London was recently ranked as the best European city for real estate investment for the third year running, beating Paris, Cambridge, Berlin, and Amsterdam to the top spot. The strength of the city’s tech sector was cited as an example of the capital’s resilience in the face of Brexit-related political uncertainty.

M&G Prudential announced it was investing £875m in buying and developing a new skyscraper in the City of London. The investment firm’s development of the 40 Leadenhall site – nicknamed Gotham City – is expected to be completed in the next four years.