Land Securities Group PLC has announced that it has reached agreement to sell Land Securities Trillium ("Trillium") to Telereal, the property investment and services company, for a total headline consideration of £750 million (approx. €830 mln.). The sale does not include the Accor hotel portfolio which will remain within Land Securities. The sale is expected to complete on 12 January.
Cash proceeds of £444 million will be received upon completion and used to reduce Group net debt in line with the priorities outlined by Land Securities at its half-yearly results in November which included the selected sale of assets to maintain the strength of its balance sheet.
Francis Salway, Chief Executive of Land Securities, said: "We are pleased to have concluded this sale in a challenging economic environment. We will now focus on our core property investment and development activities. The cash proceeds will strengthen our balance sheet in the current market and subsequently put us in a stronger position as the cycle turns.
"We continue to run the Group with a cautious outlook and a focus on balance sheet management. In London and Retail we have best in class property investment businesses with a track record of adding value at the appropriate times in the cycle."
The headline enterprise value of £750 million is based on Trillium's balance sheet (excluding the Accor hotels) as at 31 March 2008. Land Securities will receive cash proceeds of approximately £444 million upon completion, with a further £25 million of cash being deferred by up to 24 months. Net external debt of £49 million will be assumed by the purchaser of Trillium. Around £232 million of cash has already been generated by Trillium since 31 March 2008 from operations and disposals and the majority paid to Land Securities. As part of the transaction, Land Securities has undertaken to make available on completion a loan of £50 million (on market terms) to the Trillium Investment Partners fund. The transaction generates a loss of approximately £340m on the date of disposal.
The gross assets of Trillium (excluding Accor) were £1,575 million as at 31 March 2008 and £1,291 million as at 30 September 2008. The capital employed in Trillium (excluding Accor) was £1,163 million as at 31 March 2008 and £896 million as at 30 September 2008. Trillium (excluding Accor) generated underlying operating profits for the year to 31 March 2008 and six months to 30 September 2008 of £102 million and £47 million respectively.
Ian Ellis, Chief Executive of LST, will step down from the Land Securities Board on completion of the transaction.
Source: Land Securities