The transaction includes interests in nine luxury retail properties outside major European cities including the Bicester shopping village, with the deal giving the business an enterprise value of 1.8 billion euros and generating cash proceeds of 710 million euros.
While Value Retail’s prized outlet malls that have been among properties most resilient to the rise of online shopping, Hammerson has long sought an exit of its minority stake in part because of its lack of control over the company.
“The disposal focuses our portfolio on prime urban real estate with a transformed capital structure and the capacity and capability to advance our strategy in higher yielding opportunities with stronger returns, whilst enhancing returns to shareholders,” told Hammerson chief executive officer Rita-Rose Gagne to Bloomberg.
The exit from Value Retail also signals Hammerson’s latest effort to focus on prime urban shopping destinations, where local consumers contribute a higher-yielding revenue stream, whereas some suburban outlets in the U.K. like Bicester Village have been unable to attract as many international tourists as before.
On the contrary, Michael Chu, Co-CEO of L Catterton, said Value Retail is “well positioned for growth and continued success, with its high-quality portfolio, reputation for luxury and commitment to delivering a distinctive experience to customers.”
The developer said it intends to use the proceeds to reduce net debt and reinvest in assets in core markets at higher yields and stronger returns. It also plans to use the sums to buy back up to 140 million pounds worth of its shares, representing 10 percent of Hammerson’s current market capitalization.
“We have deep experience investing in luxury retail, and we are eager to leverage our operational expertise and global network of established relationships to partner with Value Retail and propel the business forward,” added Chu.
