LGP acquires The Meadows Shopping Centre in Chelmsford (UK)

Legal & General Property ('LGP') has announced that it has acquired The Meadows Shopping Centre, Chelmsford, Essex, from Lend Lease for £56.1 million (approx. €65.7 million), reflecting a net initial yield of 7.75%.

The Meadows

The Meadows provides approx. 14,000 m² of prime retail space.

The in-town shopping center asset has been acquired on behalf of LGP's UK Property Income Fund ('UK PIF), which reached its final close last month with a total geared investment capacity of circa £475 million. The asset represents the UK PIF's fourth acquisition, having invested a total of circa £260 million to date.

Situated in the center of Chelmsford, fronting the High Street, the covered shopping center provides circa 150,000 ft² (approx. 14,000 m²) of prime retail space, arranged over a single trading level, and 730 car parking spaces, within two car parks. Anchored by BHS and Wilkinson, as well as an eight-screen Odeon Cinema to the rear, the scheme contains 39 retail units in total, fully let to a range of multiples, including Warehouse, Boots, Fat Face and Sportsworld, as well as a restaurant quarter.

With an average unexpired lease term of over six years and 80% of the income secured against established retailers, the center provides a defensive income profile over the short term. To complement this, LGP has already identified a number of significant asset management opportunities to provide income growth over the medium term.

As a major retail center in the South East, and supporting a high number of businesses employing circa 80,000 people, Chelmsford benefits from an affluent catchment area, as well as excellent transport links with trains providing direct access to London Liverpool Street in just 28 minutes. Healthy footfall figures for the center have been recorded in recent years, with in excess of 7 million people visiting the site per year.

Charlie Walker, Fund Manager of the UK Property Income Fund, comments: "Against a background of increasingly limited debt available and further challenges facing retailers, there continues to be a growing polarization in the UK shopping center market.

"I fully expect that there will continue to be a number of less attractive secondary shopping center assets flooding the market, however, The Meadows, Chelmsford, represents one of only a very small handful of opportunities that provide the right combination of quality, size and location.

"Following the purchase of Fremlin Walk shopping center in Maidstone earlier this year, and further to a successful final close of the Fund in October, this purchase is in line with the Fund's strategy of acquiring well-located assets with a strong tenant line-up, but still offering the potential for active asset management."

Dan Labbad, Chief Executive Officer – EMEA, Lend Lease, said: "Now is the right time for Lend Lease to secure a sale as The Meadows is trading well and continuing to attract new retailers."

The UK PIF reached its final close in October 2010, having secured commitments totaling £300 million from 14 major international institutional investors based in the Middle East, Denmark, UK, France, Finland, Switzerland and J

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