Hammerson sells big retail parks for £455m
TWO of Wales’ biggest retail parks have been sold as part of £455m deal. Hammerson exchanged unconditional contracts on the sale of a portfolio of seven retail parks to Orion European Real Estate Fund V for a headline price of £400m with expected net proceeds of £395m.
Among the seven parks sold was Cyfarthfa Retail Park in Merthyr Tydfil.
Swansea’s Parc Tawe and Abbey Retail Park in Belfast were sold in two separate transactions, with these two sales generating proceeds totalling £55m.
Due to confidentiality clauses in the deal for Parc Tawe the details of the buyer have not yet been disclosed.
The transaction is the largest UK retail parks portfolio sale in the past decade. 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.
The Parc Tawe and Belfast retail park combined with the portfolio sale of seven retail parks, the final tranche of disposals totals £455m and represents a net initial yield of 8.7%, with a discount to a June 2019 book value of 22.2%.
In total, Hammerson has sold 14 retail parks since July 2018, generating sales proceeds of £764m to reduce the Group’s 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 Chief Executive, said: “Against a challenged retail and investment backdrop we have exited the retail parks sector. Having achieved disposals of close to £1bn 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 headline price of £400m for the sale of the seven retail parks to Orion is subject to an adjustment for rent free periods and rental guarantees and as a result the transaction is expected to generate net proceeds of £395m.
Together with the sale of a major stake in its Italie Deux flagship destination in Paris for £363m which completed in December 2019, and further retail parks disposals in 2019, this latest transaction takes Hammerson’s total disposals since the start of 2019 to £975m.
Further information on the disposals, including the impact on group earnings, credit ratios and liquidity will be incorporated as part of Hammerson’s final year 2019 results, which are due to be announced on Tuesday, February 25, 2020.