14 March 2007

By Nick Wilson

UK-based property company Liberty International said its subsidiary, Capital Shopping Centres (CSC), had entered into an agreement whereby GIC Real Estate would acquire a 40% share of the subsidiary’s interest in the MetroCentre shopping centre for £426 million.

Speaking from London, Liberty International CE David Fischel said one of the main reasons for selling was to enable the company to continue growing its business “and one of the ways is releasing capital from our interest in MetroCentre,” said Fischel.

The 169000m² MetroCentre is Europe’s largest covered retail and leisure centre.

CSC owns a 90% economic interest in the MetroCentre under a long leasehold agreement with the Church Commissioners.

Fischel said Liberty International would continue managing MetroCentre, in Newcastle.

“We will remain in contact with the retailers and the shoppers.”

He said the disposal of the share was made possible by Liberty International’s conversion to a Real Estate Investment Trust (Reit) in January this year.

Fischel said “this sort of transaction” would have been “unthinkable” before the implementation of the Reit structure because of the capital gains tax that would have been payable.

Reits do not pay capital gains tax.

“The Reit structure gives a lot more flexibility as far as asset management decisions are concerned,” said Fischel.

Liberty International chairman Robert Finch said the proceeds of the transaction would enable Liberty International to “continue to expand its overall business, which includes a £1 billion development programme”.

Liberty International is the UK’s third-largest listed property company.

Business Day