EUROPE - UK property firm Hammerson is to sell 75% of its London office portfolio for £518m (€645m).

The sale, to US investor Brookfield Office Properties, follows a change in strategy earlier this year to focus exclusively on retail.

It will leave the company - which is more than 9% owned by APG and has the Norwegian sovereign wealth fund as a major shareholder - with a 97% retail portfolio.

Of the £518m, Brookfield will pay £329m in September for a sub-portfolio of three City offices and the remaining £189m, also on City assets, in June 2013. 

The portfolio also includes a commercial and residential development site, which Brookfield intends to complete as an office asset within five years.

Hammerson said today it also planned to sell its 30% stake in a City office jointly owned by CAD161.6bn (€125.3bn) Canadian pension scheme manager CPPIB.

It expects to sell this, and other assets collectively valued at £113m, within 18 months.

However, it will hold on to its 50% stake in an East London mixed-use development asset with retail potential and its 50% stake in its London head office.

The company said it planned to reinvest the proceeds of the sale announced today in retail assets in the UK and France.

Under its revised strategy, Hammerson will target prime regional shopping centres, UK retail parks and smaller schemes, and designer outlets.

The acquisition of Hammerson's assets represents Brookfield's entry into the UK office market.

Its current 110-asset portfolio is concentrated in Australia, Canada and the US.

In a presentation published on its website, Brookfield said the deal represented an opportunity to increase significantly its European operations letting offices to global blue-chip tenants.

It also pointed to opportunities presented by existing and upcoming vacancies to reposition some of the Hammerson assets.