Hammerson sells 50% of Highcross centre for £236m

HAMMERSON, the listed owner, manager and developer of retail destinations in Europe, has exchanged contracts for the sale of a 50 percent stake in the 110 000m² Highcross shopping centre in Leicester in the UK for £236m (R4.56 billion).

The transaction also creates a new £472m joint venture with an Asian investor introduced by M&G Real Estate, the £30 billion property arm of leading international asset manager M&G.

The transaction increases the total disposals by Hammerson this year to more than £530m, including the sale of four retail parks earlier this year, in line with its plans to exit the retail park sector over the medium term.

Hammerson, which has a primary listing on the London Stock Exchange and a secondary inward listing on the JSE, recently increased its disposal target for this year to £600m as part of its reshaped strategy.

David Atkins, the chief executive of Hammerson, said they had now achieved close to 90 percent of their increased 2018 disposal target of £600m.

Atkins said this latest transaction was at a price that underpinned the underlying strengths of their flagship destinations.

“Institutional investors continue to buy into top-tier centres,” he said.

The price consideration for Highcross represents a 5 percent discount to book value in December last year allowing for capital expenditure associated with the reconfiguration of the former House of Fraser store.

Hammerson will manage the centre for the new joint venture.

Atkins added that the company was taking advantage of the current valuation disconnect with equity markets, using proceeds to both buy back their own shares at a significant discount to net asset value and reduce leverage while also continuing to selectively invest in higher growth markets.

John Duxbury, head of Retail & Leisure, M&G Real Estate, said the Highcross transaction represented a significant investment into a high quality, strategically located, well-let regional asset, which provided a great place for people to shop, dine out and be entertained.

The transaction was still subject to EU competition clearance and joint venture finance, but expected to be completed later this year.

Highcross was Leicester’s leading retail destination, attracting 18 million visitors a year.

It was anchored by John Lewis & Partners, Debenhams and a Showcase Cinema de Lux and continues to experience strong demand from retailers, with luxury perfume brand Jo Malone London recently opening its first boutique.

The centre was 96.7 percent occupancy at end-June and has an annual passing rent of £26.7m.

Shares in Hammerson rose 0.85 percent on the JSE yesterday to close at R86.45.