Hammerson PLC on Monday said it has agreed to sell its entire interest in a pan-European chain of luxury retail ’villages’ in order to focus on ‘core city centre urban destinations’.
The London-based real estate investment trust owns city-centre shopping centres in the UK and elsewhere.
Hammerson shares were up 4.2% to 30.26 pence on Monday morning in London for a market capitalisation of £1.52 billion. In Johannesburg, the stock was up 4.7% to R 7.17.
Hammerson said it has sold its entire minority interest in Value Retail PLC and associated companies to affiliates of L Catterton Partners, a Greenwich, Connecticut-based investor in consumer businesses.
The deal gives Value Retail an enterprise value of £1.5 billion and will generate €705 million, about £600 million, in cash for Hammerson.
Hammerson said it will return up to £140 million of this to shareholders in the form of share buybacks. The remainder will be used to pay down debt and to reinvest in its core urban retail market.
Following the completion of the disposal, Hammerson will adopt an enhanced dividend policy of paying out 80% to 85% of adjusted earnings. It also will conduct a 10-into-1 share consolidation.
‘This is a transformational deal for Hammerson, generating cash proceeds of about £600 million, whilst removing an overweight, low yielding and minority stake, and positioning us for accelerated growth and value creation,’ said Chief Executive Officer Rita-Rose Gagne.
Operating as the Bicester Collection, Value Retail has nine luxury shopping villages outside Barcelona, Brussels, Dublin, Frankfurt, London, Paris, Madrid, Milan, and Munich. Value Retail made a £14.8 million IFRS profit in 2023, swung from a £5.3 million loss in 2022. Its investment property valuation on December 31 was £1.89 billion.
‘We have deep experience investing in luxury retail, and we are eager to leverage our operational expertise and global network of established relationships to partner with Value Retail and propel the business forward,’ said L Catterton Co-CEO Michael Chu.
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