Hammerson withdraws from retail parks sector

By

Barbara Santamaria

Published
Feb 21, 2020

Retail parks may be seen as a more buoyant sector than shopping malls, but property giant Hammerson has sold a portfolio of seven retail parks to Orion European Real Estate Fund V in what is thought to be the largest transaction of its kind in the past decade.

The locations, including Central Retail Park in Falkirk, Cleveland Retail Park in Middlesbrough and Cyfarthfa Retail Park in Merthyr Tydfil were sold for a total of £400m.

The portfolio also includes Elliott’s Field Shopping Park in Rugby, Forge Shopping Park in Telford, Ravenhead Retail Park in St Helens and The Orchard Centre in Didcot.

Hammerson said in July 2018 that it was planning to exit the retail parks sector to build a more focused portfolio of flagship assets, premium outlets and mixed-use developments in city centres across Europe.

The seven retail parks comprise 205,000 sq m of space, which generates a net rental income of £36m per annum.

The transaction is expected to generate net proceeds of £395m after adjustments for rent-free periods and rental guarantees. The shopping centre owner has also raised £363m from the sale of a major stake in its Italie Deux flagship destination in Paris, and the recent disposal of two retail parks in Swansea and in Belfast generated further proceeds of £55m. 

Only one retail park remains under Hammerson’s control: Brent South, part of the Brent Cross estate. This is held in a joint venture with Aberdeen Standard Investments  and the company is also looking to sell it.

Together with the Italie Deux deal, and further disposals in 2019, the latest transaction takes Hammerson’s total disposals since the start of 2019 to £975m.

David Atkins, Hammerson CEO, 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.”