Hammerson takes full control of major regional mall for €230m

Hammerson is taking full ownership of the 106,000 m2 Highcross shopping centre in Leicester for £180 mln.

The UK REIT is acquiring the 40% of Highcross it did not already own from its joint venture partner, BIS Company Ltd (Postal Services Company (formerly the Royal Mail Pension Plan).

The centre comprises three department stores, 114 stores and the St Peter's Square dining quarter which features a 12-screen Cinema de Lux. Acquired at what Hammerson described as a 'modest' discount to the end-June 2014 book value, the centre generates a passing rent of £27.8 mln. The acquisition represents a net initial yield of 5.5% whilst the nominal equivalent yield is 6.25%.

The purchase is designed to reinforce Hammerson's strategy of owning high-quality retail schemes in successful locations and Highcross is the second largest asset, by area, in its portfolio after Bullring, Birmingham.

Hammerson has also unveiled a proposed placing of 71 million new shares to raise £400 mln. The proceeds will be used to fund the Highcross transaction; a £100 mln investment in a new outlet centre joint venture called VIA Outlets with Value Retail and Meyer Bergman. The remaining equity will go towards development opportunities for which £195 mln has been committed.

Hammerson CEO David Atkins said: 'The investments we have announced today underline our commitment to winning retail sectors which will deliver continued growth and outperformance.

‘We believe that 100% ownership of Highcross will enable us to increase the centre's attractiveness to both retailers and consumers and to drive future sales performance. VIA Outlets provides us with an attractive opportunity to increase the Company's exposure to the fast-growing European outlet shopping market and leverage Value Retail's extensive European platform and its relationships with luxury and premium retail brands.’