The 50 per cent owner of Meadowhall recently signed a joint venture with Norges Bank Investment Management, which bought out London & Stamford Property’s stake in the centre.
Chief executive Chris Grigg said the deal with Norges is “an exciting and important partnership which matches the importance of Meadowhall as an asset”.
Footfall at Meadowhall increased by 2.8 per cent during the six months to the end of September, as British Land “broaden(s) the centre’s appeal by widening its catchment area, attracting more affluent consumers and by extending the time people spend there”.
The group signed 41,000 sq ft of lettings during the six months, including Armani Exchange, Tessuti, Lego and Crocs.
Restaurant chain Carluccio’s also opened in the centre’s refurbished food court. British Land completed its £7m overhaul of Meadowhall’s food court last year, which it said has increased “dwell time”.
Over the past two years the centre has completed 85 lettings, also increasing net income by 4.6 per cent during that time.
The centre’s performance reflects a growing gulf between prime and secondary shopping locations.
Figures from the British Retail Consortium this week showed the proportion of empty shops in town centres hit a record 11.3 per cent in October.
The North and Yorkshire had the highest vacancy rates at 14.6 per cent.
Electricals retailer Comet, which recently entered administration, accounts for 0.7 per cent of British Land’s total rent.
“Retailers that have acclimatised to the tougher trading environment are continuing to upgrade their stores,” said Mr Grigg. “This is creating demand for the best retail locations.”
Meadowhall’s occupancy rate was among the highest in British Land’s portfolio at 98.8 per cent, with annual rental income of £82m.
Norges, which manages Norway’s oil revenues, paid £348m for the 50 per cent stake in a deal which, including debt, valued Meadowhall at £1.525bn.
At the time of the sale, Karsten Kallevig, chief investment officer for real estate at NBIM, said: “Meadowhall is one of the largest, most dominant centres in the UK. It seems like a very interesting long-term investment.
“I hope we’re going to hold it for a long time. Part of (NBIM’s) retail strategy is these large, dominant shopping centres that are as much an entertainment venue as they are a shopping outlet.
“They’re big enough that they can offer entertainment, (such as) movie theatres and restaurants. It’s really more than just going in to buy what you have on your shopping list.”
The joint venture also covers 74 acres of development land neighbouring the 1.5m sq ft centre. A planning application for a Next home and garden store on land south of Meadowhall was recently rejected by the local authority.
British Land also owns the St Stephen’s shopping centre in Hull, which had a 99.1 per cent occupancy rate at the end of September, with annual rent of £9m.
British Land’s retail footfall increased by 0.3 per cent during the half year, said the group, compared with consultant Experian’s benchmark of a 2.7 per cent national fall.
However, Yorkshire was the only region where British Land’s retail footfall failed to beat the market, with a 0.9 per cent fall, versus a 0.1 per cent Experian-measured increase. The group said its leasing work is “outperforming the market on all key operational metrics”, with 953,000 sq ft of lettings during the period.
British Land said net rental income increased 1.1 per cent to £272m. Underlying pre-tax profits gained 3.8 per cent to £137m.
The group’s portfolio value was level with March at £10.4bn.
“The decisions we have taken in recent years are ensuring we are not only delivering good results today but are also building growth into our portfolio for the future,” said Mr Grigg.
The group lifted its half-year dividend 1.5 per cent to 13.2p per share. Panmure Gordon analyst Mark Hughes said: “You own British Land in the current environment because as we have said in the past, ‘it does what it says on the tin’.
“Its stable portfolio and predictable income stream continue to deliver outperformance and a predictable and attractive dividend yield (5.1 per cent). We remain buyers.”
Meadowhall, built in 1990 on the site of a former steelworks by Yorkshire entrepreneurs Eddie Healey and Paul Sykes, attracts about 24m shoppers annually.