Hammerson: retail warehouse portfolio acquisition (UK)

Hammerson plc has exchanged contracts to acquire a portfolio of retail warehouses valued at €583 mln (£426 mln) through the purchase of LxB Holdings Limited, a property company specialising in out-of-town retail property. Each of the properties has an open A1 planning consent.

Hammerson will purchase the shares in LxB Holdings Limited and repay shareholder loans to the company for a total of €272.4 mln (£199 mln). Of this amount, €35.6 (£26 mln) will be satisfied by the issue of loan notes to one of the vendors and the balance from the group's existing resources.

The portfolio provides a combined floorspace of 116,000 m² (1.25 million ft²) and currently generates rents of €22 mln (£16.1 mln) per annum, an average of €19 (£13.90) per ft². The current ERV of the portfolio is €26.6 mln (£19.4 mln) equivalent to €22.6 (£16.50) per ft². This compares favourably with the average ERV of €32.4 (£23.70) per ft² for comparable UK retail park floorspace. In addition, there are excellent opportunities to extend and redevelop the schemes to increase the floorspace and enhance rental values. Hammerson anticipates that these developments could involve further expenditure totalling €273.8 mln (£200 mln) over the next five years.

The portfolio comprises the following properties:
- Manor Walks, Cramlington, Newcastle;
- Abbey Retail Park, Newtownabbey, Belfast;
- The Orchard Centre, Didcot;
- Seacourt Retail Park, Oxford;
- a 50% interest in Parc Tawe Phase 1, Swansea.

The vendors are Bank of Scotland Corporate, West Coast Capital (Retail Parks) Limited, BG Holding EHF and a group of management shareholders.

John Richards, Chief Executive of Hammerson plc, said:

"This acquisition substantially increases Hammerson's critical mass in the retail parks sector and extends the group's development pipeline for retail warehousing. The parks in this portfolio all benefit from open A1 consent. Retailer demand for well configured retail park space remains strong and we believe such schemes will continue to outperform.

Hammerson has built up a highly successful retail parks business over the past four years, including notable developments in Gloucester and Merthyr Tydfil which are now trading."

Hammerson was represented by Strutt & Parker and Herbert Smith. The vendors were represented by Clifford Chance.

Source: Hammerson

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