GIC incurs 62% loss on sale of stake in UK Bluewater Mall to Landsec for US$152 million

According to a report by MingTianDi, which remains published online on its website, GIC, Singapore’s Sovereign Wealth Fund, has sold its 17.5 percent stake in the Bluewater shopping centre, the UK’s fifth-largest mall, to London-based developer and property investor Land Securities Group (Landsec) for £120 million (US$152 million).

This sale represents a 62 per cent loss on GIC’s nearly two-decade investment.

GIC originally acquired the stake in Bluewater in 2005 from Prudential’s property investment unit (now M&G Real Estate) for £318 million, valuing the mall near London at £1.8 billion at the time. The recent sale values the mall at £686 million, marking a 62 per cent decline in British pounds and a 74 per cent markdown in US dollars.

This transaction increased Landsec’s stake in Bluewater from 48.75 per cent to 66.25 per cent, granting them control over the asset.

“This transaction underscores our ability to continue to create value through prime investments in scarce, major retail destinations with attractive return profiles,” said Bruce Findlay, managing director of retail at Landsec, in a release.

“Bluewater is one of the UK’s top retail destinations and a key part of our strategy to further build our relationships with key brands.”

According to MingTianDi, GIC declined to comment on the transaction.

Located 21.5 miles (34.6 kilometres) southeast of central London in Kent, Bluewater spans 1.8 million square feet (167,225 square metres) across three levels and occupies a 240-acre site. The 1999-vintage mall hosts over 300 stores, food and beverage outlets, and entertainment venues, attracting over 27 million visitors annually.

Landsec anticipates that the acquisition will boost its net rental income by £10.3 million annually, based on the mall’s performance over the twelve months ending in March.

GIC’s initial purchase was part of a UK property acquisition spree prior to the 2008 financial crisis.

In 2005, GIC partnered with Lehman Brothers Real Estate Partners and Canadian firm Realstar Asset Management to acquire a portfolio of 73 UK hotels from InterContinental Hotel Group for £1 billion.

In 2007, they purchased the Merrill Lynch Financial Centre office campus in London for £480 million.

In 2014, Landsec acquired a 30 per cent stake in Bluewater from Lendlease for £656 million, valuing the property at £2.2 billion. Landsec also paid £40 million for full asset management rights and 110 acres of surrounding land. Post-transaction, Lendlease retained a 25 per cent share, while GIC and M&G Real Estate each held 17.5 per cent. Hermes Investment Management and Aberdeen Asset Management (now Abrdn) held the remaining stakes of 7.5 per cent and 2.5 per cent, respectively.

In 2017, Hermes sold its 7.5 per cent stake to Royal London for £155 million. By 2021, Landsec acquired Lendlease’s remaining 25 per cent stake for £172 million, valuing the mall at £688 million.

As part of this deal, Landsec sold 6.25 per cent of Lendlease’s shareholding to M&G Real Estate, increasing M&G’s interest to 23.75 per cent.

GIC’s investments overseas

It should be noted that GIC, as a rule, invests outside Singapore.

In a parliamentary question filed on 2 July, Mr Liang Eng Hwa, MP for Bukit Panjang SMC, asked the Prime Minister and Minister for Finance whether the Government will review its investment mandates with GIC to consider the suggestion from some industry players for GIC to allocate part of its investments to securities listed on the Singapore Exchange to revitalise the local stock exchange.

In response, Second Minister for Finance Chee Hong Tat said that the government will continue to find ways to improve the attractiveness of the local equity market, but directing GIC to invest in locally listed companies is not the solution.

He stated that GIC must make professional investment decisions that aim to achieve good long-term returns for Singapore. He added that to preserve the international purchasing power of the reserves, especially for crisis needs, GIC also invests in a globally diversified portfolio.