UK retail landlord Hammerson said on Friday that it has agreed to sell its remaining retail park portfolio to Orion's European Real Estate Fund V for £400 mln (€478 mln), reflecting a 22.8% discount to the June 2019 book value and a net initial yield of 8.9%.
The transaction is the largest UK retail park portfolio sale in the past decade and brings Hammerson's total disposals since the start of 2019 to £975 mln.
The sale follows Hammerson’s strategic decision, announced in July 2018, to exit the retail parks sector over the medium term to create a focused portfolio of flagship assets, premium outlets and City Quarters across major European cities.
Separately, Parc Tawe in Swansea and Abbey Retail Park in Belfast have been sold individually, generating proceeds totalling £55 mln.
The portfolio sold to Orion comprises 205,000 m2 of space which generates a net rental income of £36 mln per annum.
In total, Hammerson has sold 14 retail parks since July 2018, generating sales proceeds of £764 mln to reduce its debt and further strengthen the balance sheet. The group has an interest in one remaining retail park, Brent South, part of the Brent Cross estate, which is held in a joint venture with Aberdeen Standard Investments and is marked for sale.
David Atkins, Hammerson’s CEO, said: 'Against a challenged retail and investment backdrop we have exited the retail parks sector. Having achieved disposals of close to £1 bn since the beginning of 2019, our focus remains on strengthening our balance sheet to create further resilience. The completion of this strategic disposal enables us to create a more concentrated portfolio of flagship venues, premium outlets and City Quarters which we expect will deliver greater levels of both income stability and growth over the medium term.'
The parks included in the portfolio transaction are:
Central Retail Park (Falkirk)
Cleveland Retail Park (Middlesbrough)
Cyfarthfa Retail Park (Merthyr Tydfil)
Elliott’s Field Shopping Park (Rugby)
Forge Shopping Park (Telford)
Ravenhead Retail Park (St Helens)
The Orchard Centre (Didcot)
Hammerson was advised by Morgan Stanley and Herbert Smith Freehills.
