Hammerson, Axa sell Paris office building for EUR 335m

Hammerson and Axa REIM France are selling their shares in the joint venture company that developed and owns a 22,000 m² office building at 9 Place Vendôme, Paris for EUR 335 mln. The buyer, SAS Sloane place Vendôme, has signed a conditional agreement with the joint venture partners and paid a non-refundable deposit of EUR 20 mln. Completion of the sale is scheduled for 9 July.

In a statement, Hammerson said the net yield for the buyer comes to less than 3.5% once all the costs associated with the transaction are taken into account.

Hammerson will book net proceeds of EUR 307 mln on the disposal of its 50% interest in the underlying property, generating a surplus of EUR 53 mln over its 31 December 2006 value. On Hammerson's development cost of EUR 133 million, the surplus comes to EUR 174 mln - or 130%. The London-based real estate investment trust (REIT), which focuses on the UK and France, acted as development manager to the 50/50 joint venture formed in 1999. The scheme was completed in May 2006 and the main office tenant is law firm Clifford Chance. There is also 5,500 m² of retail space. The annual rent is projected to be EUR 23 mln once the building is fully let and the customary rent-free periods have expired.

The 9 place Vendôme scheme is Hammerson's only French property which is outside the French tax-exempt REIT (SIIC) regime. This means Hammerson will have to pay EUR 26 mln in French capital gains tax on the sale of shares and release deferred tax of EUR 43 mln.

John Richards, ceo of Hammerson, said: 'This disposal is in line with Hammerson’s policy of recycling capital from assets where we have added substantial value into new opportunities. We expect to make an announcement on further investments in France in the near future'.