UK REIT Hammerson confirmed on Wednesday that it has exchanged unconditional contracts on the portfolio sale of its seven retail park assets to Canadian investor Brookfield for £330 mln (€380 mln).
The seven-asset portfolio had a book value of £384 mln at the end of the company's full year results for 2020, released in March 2021. The deal – which concludes Hammerson’s exit from the UK retail parks sector - represents an 8% discount to the 31 December 2020 book value of £357 mln and a 14% discount to the end-March 2021 value. The total sale price of the transaction represents a net initial yield of 8.6%. Completion of the transaction is expected by the end of May.
The portfolio spans 205,000 m2 and comprises Central Retail Park in Falkirk, Cleveland Retail Park in Middlesbrough, Cyfarthfa Retail Park in Merthyr Tydfil, Elliott's Field Shopping Park in Rugby, Forge Shopping Park in Telford, Ravenhead Retail Park in St. Helens and The Orchard Centre in Didcot.
The proceeds will be used by Hammerson to further strengthen the balance sheet, reducing net debt, which was £2.2 bn at 31 December 2020, and increasing liquidity, which stood at £1.7 bn at the same date.
‘As highlighted at the full year results, our immediate priority is to strengthen the balance sheet,’ commented Rita-Rose Gagné, Chief Executive of Hammerson. ‘This latest disposal is a positive step. Alongside this, we continue to focus on delivering operationally. We have successfully welcomed back our customers in England to our flagship venues, with footfall levels well above the June 2020 reopening, and look forward to reopening our other destinations as local restrictions allow over the coming months.’
The present Brookfield bid is believed to be higher than a previous offer by Brookfield made in early 2020. However, it is still significantly below a putative deal with Orion, which collapsed last year when the pandemic took hold.
Orion bid £400 mln for the portfolio of assets last April, but pulled out in May as lockdowns gripped the retail sector, notifying Hammerson that it 'had resolved not to complete the purchase agreement'. However, Hammerson did get to keep Orion's £21 mln deposit at that time.
