Hammerson shares jump after firm sells £1.5bn stake in Bicester Village
British shopping centre giant Hammerson has sold its interest in the company behind Bicester Village in a deal worth £1.5bn, according to a statement released today.
The London-listed property firm said it had disposed of its “overweight, non-controlling and yield-dilutive interest” in Value Retail, generating cash proceeds of around £600m, in a move it hoped would ensure a “clean exit from a complex structure at an attractive price”.
The buyer is L Catterton, the private equity firm backed by French luxury fashion house LVMH Moet Hennessy Louis Vuitton.
Hammerson said it would use the cash generated to reduce its debt and reinvest into assets in its core markets at “higher yields and stronger returns” with a priority on joint venture consolidation and repurposing certain assets.
Shares in the company jumped more than ten per cent in early deals on the news before pairing gains.
Rita-Rose Gagné, chief executive at Hammerson, said: “This is a transformational deal for Hammerson, generating cash proceeds of c.£600m whilst removing an overweight, low yielding and minority stake, and positioning us for accelerated growth and value creation.
“The disposal focuses our portfolio on prime urban real estate with a transformed capital structure and the capacity and capability to advance our strategy in higher yielding opportunities with stronger returns, whilst enhancing returns to shareholders.
“I’m excited about the opportunity this gives us to build on our momentum and track record of the last three years.
“We are at a point in the cycle where I can now be on the front foot to capture the exceptional value creation opportunities I see in the near, medium and long term. This is exactly what this transaction will deliver.”
Once the sale is complete, Hammerson said it would return up to £140m to shareholders via an on-market share buyback, subject to shareholder approval.
In its last full year results, published in February, the firm delivered adjusted earnings growth of 11 per cent to £116m, and said footfall across its estate was up three per cent year-on-year.
Gross rental income for the year totalled £208m, down slightly from £215m the year before, due a number of disposals.
In order to repair its balance sheet, the firm has sold a number of assets across Europe and the UK over the past 18 months.
This included pulling out of a billion-pound scheme to bring a Westfield to Croydon and the sale of its Union Square shopping mall in Aberdeen for £111m.