Hammerson plc has exchanged contracts and completed the sale of a 75% interest in Bishops Square, Spitalfields, London E1. Bishops Square will now be held in a 75:25 joint venture between the Oman Investment Fund (OIF), an investment arm of the Government of Oman, and Hammerson.
Bishops Square was developed by Hammerson in partnership with the Corporation of London and completed in 2005. The 71,900 m² of office space is let to international law firm, Allen & Overy LLP, under leases expiring in 2030, with tenant's break options in 2027. There is a further 4,600 m² of retail space let to a range of tenants. Net passing rents at December 31, 2008 were £34.5 million/annum.
The consideration for the property is £445 million and the joint venture assumes the secured debt facility. The book value of the property at December 31, 2008 was £486 million. The transaction will reduce Hammerson's net debt by £386 million and its adjusted net assets per share by 6 pence.
John Richards, Chief Executive of Hammerson, said: "We are delighted to be partnering the Oman Investment Fund in this new joint venture. This transaction has allowed us to further strengthen the Group's balance sheet whilst retaining a significant stake in one of London's best office buildings.
Our recently announced property disposals together with the earlier rights issue will reduce the group's net debt by around £1.2 billion. Following completion of these asset sales, net debt will be approximately £2.1 billion. This gives a pro-forma loan-to-value ratio of less than 40%, based on the portfolio valuation at December 31, 2008, ensuring we are well placed for the future."
Hassan Al Nabhani, Chief Executive Officer of OIF said: "We are equally pleased to be in partnership with Hammerson and to own a stake in one of the landmark buildings in the London office property market."