Hammerson prepares to sell UK retail parks portfolio to Canada’s Brookfield

By

Nigel TAYLOR

Published
Apr 12, 2021

Hammerson is selling all seven of its UK retail parks to Canadian private equity firm Brookfield for around £350 million.

That was according to the Sunday Times, although the commercial property giant said any deal is far from sealed in a statement it made Monday morning.

“The company confirms that it is in discussions on terms of a possible disposal of its retail parks portfolio to Brookfield”, it said, adding that “there can be no certainty that a transaction will take place or the terms on which any transaction may occur. The company will provide a further update in due course, if appropriate”.

The proposed sell-off comprises its England retail parks in Didcot, Middlesbrough, St Helens, Telford and Rugby, plus Merthyr Tydfil in Wales and Falkirk in Scotland.

Their sale will certainly help to reduce Hammerson’s heavy debt load of £2.2 billion after what has been a punishing year for the group as non-essential retail stores were forced to close and collecting rents became difficult at best.

The owner of Birmingham’s Bullring shopping centre needs to raise funds after losses totalled £1.7 billion for fiscal 2020. It wrote down the value of its portfolio by almost 25% to £6.3 billion last year as the pandemic led to a major shortfall in retail and office rents.

Although the sale is being seen as a much needed move given the state of its finances, retail parks have been a more durable part of its property portfolio. In the first quarter, Hammerson collected 64% of the rents due at retail parks compared with 36% at UK shopping centres.

And in general, UK retail parks have proved to be more resilient than high streets and enclosed shopping centres throughout the pandemic. Their open-air status made consumers feel safer shopping at essential stores during pandemic while their bigger stores were better suited to handling click and collect orders.

Interestingly, lifestyle retail group Frasers sees a strong future in them, having bought two retail parks in the last six months, with a view to buying more if the opportunity arises.

On Monday, Hammerson also said it continues to make asset disposals in liquid markets to further strengthen the balance sheet, with gross proceeds of £73m achieved to date in 2021.

Over the year, Hammerson has also raised £552 million through an emergency rights issue and a further £274 million through the sale of its stake in European business VIA Outlets.