Selfridges'£250m makeover goes to Stanhope

Selfridges, the department store group, yesterday said it had selected Stanhope, the property developer, to carry out a £250m makeover of its flagship Oxford street store - passing over its largest shareholder, British Land.

Selfridges, the department store group, yesterday said it had selected Stanhope, the property developer, to carry out a £250m makeover of its flagship Oxford street store - passing over its largest shareholder, British Land.

Stanhope, which with British Land was a final contender from a shortlist of nine, was chosen by an independent committee of advisers, including Jones Lang LaSalle, the commercial property agents; Freshfields, the law firm; and UBS Warburg, the financial adviser.

Peter Williams, Selfridges' finance director, said the Stanhope proposal had "edged it" because it had offered better financial terms and was "more in keeping with Selfridges' brand image".

Asked whether there had been pressure from independent shareholders not to select British Land, which owns 13 per cent of Selfridges, Mr Williams said: "No. Not at all. We have been very transparent about the process. We wanted to ensure that British Land was not advantaged or disadvantaged."

Under the terms of the agreement with Stanhope, the property company will shoulder the entire cost of the development in return for a 175-year lease on completion of the project. Selfridges will occupy the retail area, car park and some of the office space created, rent-free. Any profit at the end of the project will be divided equally between the two groups.

The extension will increase selling space in Selfridges' biggest store by 20 per cent, or 100,000sq ft. The extra area will be used to build a bigger foodhall, a men's fashion department and a sportswear unit. But most of the new space will be used for a hotel, offices, leisure and residential facilities and a car park. Stanhope and Selfridges will let out the amenities.

Mr Williams said the groups hoped to secure planning permission from Westminster council by the middle of next year. The work is expected to take four years to complete.

A spokeswoman for British Land said: "We fully understand Selfridges' decision. Our own proposals were significantly more extensive than the brief. We saw the final stage not so much as a contest between two developers, but as a business decision that had to be made by Selfridges."

The spokeswoman added that British Land had entered talks with Stanhope regarding possible co-participation. Asked whether British Land would consider divesting its stake in the retailer, she said: "The stake is an investment, which is totally separate from this. There is no causal relationship between this decision and what happens to the stake."