Hammerson’s recent divestment marks a significant shift in its strategic focus. This divestment involves the following key points:
- Hammerson has sold its 40% stake in Value Retail for £1.5 billion.
- L Catterton, backed by LVMH, aims to enhance Value Retail’s portfolio.
- Hammerson’s stock rose by 3.3% following the announcement.
- The transaction reduces Hammerson’s loan-to-value ratio from 44% to 23%.
Hammerson has completed the sale of its 40% stake in Value Retail, which owns Bicester Village and other European outlets, to L Catterton for £1.5 billion. This sale allows Hammerson to focus on its core assets and enhance financial stability.
L Catterton, supported by LVMH and the family office of Bernard Arnault, plans to leverage its expertise in luxury retail to enhance Value Retail’s portfolio. Michael Chu, co-chief executive of L Catterton, expressed enthusiasm about the partnership, citing substantial experience in luxury investments, including brands like Sweaty Betty and Gant.
Despite the sale price being nearly 25% lower than the recent valuation of the nine malls located in major cities such as Barcelona, Brussels, Dublin, Frankfurt, London, Paris, Madrid, Milan, and Munich, Hammerson will net £600 million in cash after accounting for debts. This move is part of Hammerson’s strategic shift towards large, city-centre ‘destination’ malls, as directed by CEO Rita-Rose Gagné.
Following the announcement, Hammerson’s stock increased by 3.3%, closing at 30p per share. Analyst Matthew Saperia of Peel Hunt described the transaction as potentially transformational for the company. Since joining during the pandemic, Gagné has prioritised portfolio realignment, stating that the sale will enable the company to concentrate on primary holdings.
Post-sale, Hammerson will retain ownership of ten major shopping centres, including The Oracle in Reading and Westquay in Southampton, valued at approximately £2.7 billion. Proceeds from the sale will be allocated to repaying £95 million of debt, reinvesting £350 million into the remaining portfolio, and returning £140 million to shareholders through a share buyback programme. Additionally, Hammerson plans to increase its dividend payout ratio from 60-70% to 80-85% of adjusted earnings.
This deal significantly enhances Hammerson’s financial stability, reducing its loan-to-value ratio from 44% to 23%. Gagné hailed the transaction as a pivotal moment, positioning Hammerson to capitalise on future growth opportunities.
This strategic divestment positions Hammerson for future growth and enhanced financial stability.
