Hammerson Retail Parks Sale Delayed By Buyer

A £400m deal for property development group Hammerson's entire retail park portfolio has been delayed.

On 21st February, Hammerson advised that it had exchanged unconditional contracts on the sale of a portfolio of seven retail parks to Orion European Real Estate Fund V (“Orion”) for a headline price of £400m with expected net proceeds of £395m.

In a statement, Hammerson said:  

"Under the terms of the unconditional sale and purchase agreement (the "SPA"), Hammerson and Orion were required to complete the Transaction on 23 April 2020. 

"Despite this, and notwithstanding continued preparation between legal and property teams up until today, Orion has notified Hammerson this morning that it does not intend to complete the Transaction on 23 April as it is obliged to do under the terms of the SPA. 

"Hammerson remains ready and able to comply with its completion obligations under the SPA, and is in dialogue with its counterparties at Orion. In accordance with the terms of the SPA, if Orion fails to complete on 23 April 2020, Hammerson will serve a notice to complete on Orion specifying that completion must occur by no later than 6 May 2020. If completion does not occur by such date, Hammerson will take steps to terminate the SPA and the £21 million deposit which is currently held in escrow will become immediately due and payable to Hammerson."

Hammerson said of the initial deal:

This 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.

Separately, Parc Tawe, Swansea and Abbey Retail Park, Belfast have been sold individually generating proceeds totalling £55m. Combined with today’s portfolio sale of seven retail parks, this 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.”

Details on the retail parks portfolio disposal

The seven asset portfolio of UK retail parks comprises 205,000m² of space which generates a net rental income of £36m per annum.

The parks included in the portfolio transaction are:

• 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)
• The Orchard Centre (Didcot)

The total sale price of the portfolio transaction represents a net initial yield of 8.9% and is 22.8% below the last reported book value as at 30 June 2019. 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 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.

Retailers present on the aforementioned retail parks include: Bensons for Beds, Carpetright, Dunelm, dwell, Harveys, Homesense, Furniture Village, NCF Living, Next Home, Oak Furnitureland, ScS, Sofology, Tapi Carpets and The Range.

Source : Insight DIY Team and Hammerson

Image : Imran Khan Photography / Shutterstock.com

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