Hammerson is pleased to announce that it has exchanged contracts for the sale of the majority of its office portfolio to Brookfield Office Properties for aggregate cash proceeds of £518 million (approx. 642 million).
Earlier this year Hammerson announced a revised strategy to become a specialist retail property company, and the intention to sell its London office assets. The main assets being sold are: 99 Bishopsgate, EC2; the 50% stake in 125 Old Broad Street, EC2; Leadenhall Court, EC3; and the development site Principal Place (commercial and residential), EC2.
Transaction key points:
Major disposal comprising six assets which represent 75% of London Group portfolio
Gross sale proceeds of £518 million are 5% above proforma book value and represent a 5.2% initial yield
Hammerson proforma portfolio now 97% retail
Portfolio sale allows significant reinvestment program to increase scale in successful retail property sectors.
Payment of £329 million in respect of 99 Bishopsgate, Principal Place and two smaller assets will be received by September 30, 2012. 125 Old Broad Street and Leadenhall Court will complete by June 30, 2013 for £189 million. Further details on the individual assets are provided in the notes below.
The sale is expected to be broadly neutral to 2012 earnings. Hammerson will have proforma cash and unutilized facilities of around £1 billion, leaving proforma gearing and LTV ratios at 34% and 26% respectively.
The proceeds will be used to increase scale and focus through investment in retail developments and acquisitions in Hammerson's three chosen areas:
Prime regional shopping centers
Hammerson is on site at Les Terrasses du Port, Marseille, a £400 million retail and leisure scheme which is on track to open in spring 2014, and is refurbishing Queensgate, Peterborough. Hammerson is making good progress with a number of its other major retail schemes in both the UK and France.
Convenient retail parks
Hammerson plans to accelerate extension and refurbishment projects in its UK retail parks and smaller retail schemes. Hammerson has identified projects worth £320 million which show an average yield on cost in excess of 7.5%, and has recently commenced construction at Monument Mall, Newcastle, and Manor Walks, Cramlington.
Premium designer outlets
Hammerson has an investment in the highly successful Value Retail business which owns premier outlet villages in nine of Europe's main cities. Having secured an additional stake in December 2011, Hammerson retains a close dialogue with the management team and believes there will be opportunities for further future investment.
David Atkins, Chief Executive of Hammerson said: "In our strategic review announced earlier this year we identified the opportunity to enhance returns by focusing our energy and capital on the successful sectors of retail which cater to consumers' increasing desire for experience, convenience and value.
"I'm delighted that we have been able to achieve our goal of becoming a pure retail business earlier than anticipated by arranging a single transaction for t