Hammerson offloads seven retail parks to Orion in £400m deal

Hammerson has announced it has agreed a deal to offload a portfolio of seven retail parks to Orion European Real Estate Fund V (Orion) in a £400m deal.

The transaction marks the largest UK retail park portfolio sale in the past decade and 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, Hammerson also revealed Parc Tawe, Swansea and Abbey Retail Park, Belfast have been sold individually generating around £55m.

Following the sales, the 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 which it said has reduced the group’s debt and “further strengthen the balance sheet”.

Hammerson has now 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 has also been “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.”

The parks included in the 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)

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.