UK real estate investment trust Hammerson has exchanged contracts to sell the bulk of its office portfolio to US group Brookfield Office Properties for total cash proceeds of £518 mln (EUR 660 mln), representing a 5% premium to book value. The deal reflects a yield of 5.2%.
UK real estate investment trust Hammerson has exchanged contracts to sell the bulk of its office portfolio to US group Brookfield Office Properties for total cash proceeds of £518 mln (EUR 660 mln), representing a 5% premium to book value. The deal reflects a yield of 5.2%.
Hammerson announced earlier this year that it intended to sell its London office portfolio as part of a revised strategy to become a specialist retail property company.
Under the agreement, Hammerson is selling 99 Bishopsgate; a 50% stake in 125 Old Broad Street; Leadenhall Court; and the commercial and residential development site Principal Place. The package comprises a total of six assets representing 75% of Hammerson's London portfolio.
In a statement, London-listed Hammerson said the deal lifts the share of retail assets in its portfolio to 97%. The sale is expected to be broadly neutral to 2012 earnings, it added.
On completion of the disposals, Hammerson will have proforma cash and unutilised facilities of around £1 bn, which will be used to finance the company's core retail business. Hammerson has two major retail developments ongoing, Les Terrasses du Port in Marseille, a £400 mln retail and leisure scheme which is on track to open in spring 2014, and Queensgate, a major refurbishment in Peterborough.
In addition, the company plans to accelerate extension and refurbishment projects in its UK retail parks and smaller retail schemes. Hammerson said it has identified projects worth £320 mln which show an average yield on cost in excess of 7.5%, and has recently commenced construction at Monument Mall, Newcastle, and Manor Walks, Cramlington.
The company is also investing in the premium designer outlets segment, owning a stake in the highly successful Value Retail business which owns premier outlet villages in nine European cities.
David Atkins, chief executive of Hammerson, said: 'I’m delighted that we have been able to achieve our goal of becoming a pure retail business earlier than anticipated by arranging a single transaction for the majority of our London offices which secures excellent value for shareholders. I am confident that at this point in the cycle we can reinvest successfully to increase scale in our three chosen areas of prime shopping centres, convenient retail parks and premium designer outlets.'
