UK REIT Hammerson is seeking to expand its new VIA Outlets venture into a €1 bn platform, the company's CEO David Atkins told PropertyEU.

UK REIT Hammerson is seeking to expand its new VIA Outlets venture into a €1 bn platform, the company's CEO David Atkins told PropertyEU.

Hammerson has a 47% stake in VIA Outlets, a new joint venture launched in July 2014 with global outlet specialist Value Retail, Dutch pension fund asset manager APG and European retail asset manager Meyer Bergman. APG also has a 47% stake with Value Retail and Meyer Bergman own the remainder.

'There is a clear and growing requirement for premium outlet space from retailers,' Atkins said. 'VIA Outlet's newly acquired portfolio in major European cities has the potential to deliver strong returns through the combined expertise of this unique partnership.'

It’s not difficult to understand why Atkins is keen to expand Hammerson's position in the premium outlet centre business. At the presentation of the company’s excellent 2014 earnings earlier this year, Atkins announced that its outlet business generated double-digit growth in retail sales and rents, The new venture is expected to generate an IRR in excess of 10%.

Since the creation of VIA Outlets, which initially acquired Batavia Stad in Amsterdam and Fashion Arena in Prague, the partnership has invested over €300 mln to create a portfolio of over 180,000 m2 of retail space and in excess of 500 stores.

Late last year, the joint venture acquired the Freeport portfolio from private equity investor, The Carlyle Group which added another three assets – Alcochete in Portugal, Kungsbacka in Sweden and Excalibur in the Czech Republic – to the portfolio. Together with its latest acquisition – Landquart in Zurich – the joint venture now has six outlet centres in total and the latest acquisition brings the blended initial yield of Hammerson's centres to 8%. This includes a total return of 12.8% last year from its outlet centre business which in turn is based on an 8.5% rise in income and a 4.3% increase in capital value.

Hammerson has had exposure to the outlet centre business since 1998 through its 38% stake in Value Retail. Value Retail ranks as one of the three largest operators in the European outlet centre market alongside McArthurglen and Neinver which together account for around 25% of a very fragmented market.

Hammerson claims Value Retail is positioned at the top level, with its shopping-tourism Villages serving the international luxury and fashion consumer. It has nine Villages across Europe.