Hammerson has exchanged contracts to sell seven retail parks to Orion European Real Estate Fund V, in the largest deal for a UK retail park portfolio in a decade.
EG previously revealed that Hammerson had appointed Morgan Stanley to sell the portfolio for £400m.
A headline price of £400m has been agreed, subject to adjustment for rent-free periods and rental guarantees. The landlord expects to generate £395m from the deal.
The total sale price represents a net initial yield of 8.9% and is 22.8% below the last reported book value as at 30 June 2019.
The portfolio totals 2.2m sq ft and generates a net rental income of £36m per annum.
The retail parks 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 sale follows Hammerson’s decision, announced in July 2018, to exit the retail parks sector over the medium term.
Separately, Parc Tawe in Swansea and Abbey Retail Park in Belfast have been sold individually, generating proceeds totalling £55m. The latter was sold to Canadian form Slate Asset Management, which marked its first deal in the UK.
Combined with the portfolio sale, Hammerson’s retail park disposals total £455m and represents a net initial yield of 8.7%, with a discount to the 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 group debt.
Hammerson has a stake in one remaining retail park, Brent South, part of the Brent Cross estate, NW2, which is held in a joint venture with Aberdeen Standard Investments and is marked for sale.
David Atkins, chief executive of Hammerson, said: “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.”
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, the latest transaction takes Hammerson’s total disposals since the start of the year to £975m.
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