Orion Capital Managers has confirmed it will not complete the acquisition of a £400 mln (€460 mln) UK retail park deal agreed on 20 February with vendor Hammerson, the UK REIT said on Wednesday.
The UK private equity firm’s European Real Estate Fund V was due to close the acquisition by 6 May.
The collapsed deal means Hammerson is now allowed to cash in a £21 mln deposit held in escrow and look for a new buyer for the portfolio, which includes seven retail parks with 205,000 m2 of space. The parks are located in Didcot, Falkirk, Merthyr Tydfil, Middlesbrough, Rugby, St Helens and Telford.
According to those who track the market, Hammerson had four other bids on the assets including a broad mix of bidders with offers ranging from £310 to £345 mln – considerably below Orion’s.
‘There was a good depth of well capitalised bidders, which does suggest that this portfolio will trade, however given other moving parts (Covid) and previous pricing by underbidders, this is likely to be considerably below the Orion price, notwithstanding the holding of the deposit,’ commented Colm Lauder, real estate analyst at Goodbody.
UK retail park capital values declined by 7% in Q1 2020 according to the latest MSCI Index data.
In February Hammerson said the sale to Orion would be the largest of its kind in the UK for a decade and that the £400 mln sales price equated to a net initial yield of 8.9%, a 22.8% discount to 30 June 2019 book value.
Morgan Stanley has been advising Hammerson.
Orion declined to comment.
