Hammerson has exchanged contracts to sell a portfolio of seven retail parks for £400m, as it continues its bid to strengthen its balance sheet.
The portfolio sale, which has been acquired by Orion European Real Estate Fund V, and the separate sales of two other retail parks in Swansea and Belfast totalling £55m, represents a discount to June 2019 book value of 22.2%.
The sales follow 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 retail park sales programme is now almost complete with just a stake in one asset remaining for sale – Brent South, part of the Brent Cross estate.
In total, Hammerson has sold 14 retail parks since July 2018, generating sales proceeds of £764m.
The seven asset portfolio of UK retail parks comprises 205,000 square metres of space which generates a net rental income of £36m per annum.
The portfolio comprises: Central Retail Park (Falkirk); Cleveland Retail Park (Middlesbrough); Cyfarthfa Retail Park (Merthyr Tydfil); Elliott’s Field Shopping Park (Rugby); Forge Shopping Park (Telford); Ravenhead Retail Park (St Helens); and The Orchard Centre (Didcot).
The total sale price of the portfolio transaction represents a net initial yield of 8.9%. The headline price of £400m 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 shopping centre in Paris for £363m, which completed in December 2019, and the retail parks disposals, Hammerson’s total disposals since the start of 2019 is £975m.
[Hammerson’s latest tranche of retail sales has been made at a huge discount to its June 2019 valuations, reflecting the rate at which some retail assets’ values are falling and the fact that the market knows Hammerson is to some degree a forced seller. It has recouped almost £1bn since the start of 2019 to put it in a much more resilient position to combat the changing nature of retail. Its portfolio is now concentrated on dominant shopping centres throughout the UK and Europe, premium outlets and its ‘City Quarters’ assets, where it plans to create mixed-use environments to include residential, leisure, workspace as well as retail. Hammerson’s share price was up almost 3% in early trading following the announcement, a clear indication of the market acknowledging its efforts to address its balance sheet, which has been heavily impacted by falling retail property values. QuotedData has published a report on the retail property market which details the different sub-sectors of retail, including retail parks and mixed-use development, and includes profiles of all the retail-focused property companies. To read it click here.]
HMSO : Hammerson sells retail park portfolio for £400m