Norway SWF close to buying $1.7 bln UK mall stake-source

LONDON Thu Aug 9, 2012 12:01pm EDT

LONDON Aug 9 (Reuters) - Norway's sovereign wealth fund is close to buying a majority stake worth upwards of 1.1 billion pounds ($1.7 billion) in the Meadowhall shopping mall in Sheffield, 165 miles north of London, which is being jointly sold by London & Stamford and British Land, a source close to the deal said.

The $610-billion sovereign wealth fund, the world's second largest after the Abu Dhabi Investment Authority, will buy a 75 percent share in the 1.4 million square foot mall, marking its second UK property investment since it invested 448 million pounds into London's Regent Street in 2010.

Barring any last minute obstacles, the deal should complete within "days not weeks" the source told Reuters.

British Land will retain a 25 percent share in Meadowhall, which it valued at 1.42 billion pounds at its annual results in May, and will retain management of the site, two other sources familiar with the sale told Reuters. The 21 year-old shopping centre is the company's third biggest property by value.

British Land bought Meadowhall in 1999 for 1.17 billion pounds and sold a 50 percent stake to London & Stamford and a Middle Eastern partner for 588 million pounds in 2009. The two companies and Norges Bank Investment Management, which manages the sovereign wealth fund, declined to comment

Other parties reported to have been looking at Meadowhall included Canadian Pension Plan, Chinese Investment Corporation, and Singaporean sovereign wealth fund Government Investment Authority.

Meadowhall, along with Capital Shopping Centre's Metrocentre in Gateshead, was part of the first wave of British mega-malls built in the 1990s.

Large UK shopping centres that dominate their catchment area like Meadowhall are highly prized by property investors as they have so far managed to weather the tough retailing climate better than the rest of the UK.