Hammerson, a major player in the UK’s retail property sector, has sold its 40 per cent stake in Value Retail, the owner of Bicester Village and eight other high-end outlet shopping centres across Europe, to LVMH and its private equity arm, L Catterton, for £1.5 billion. This sale is part of a broader strategy to focus on core assets.
L Catterton, supported by LVMH and the family office of its billionaire founder Bernard Arnault, aims to leverage its expertise in luxury retail to enhance Value Retail’s portfolio. Michael Chu, co-chief executive of L Catterton, expressed enthusiasm about partnering with Value Retail, citing their substantial experience in luxury investments, including brands like Sweaty Betty and Gant.
Despite the sale price being nearly 25 per cent lower than the most recent valuation of the nine malls located in key cities such as Barcelona, Brussels, Dublin, Frankfurt, London, Paris, Madrid, Milan, and Munich, Hammerson will net £600 million in cash after accounting for debts. This divestment is seen as a strategic shift towards focusing on large, city-centre “destination” malls, a move led by Hammerson’s CEO, Rita-Rose Gagné.
Hammerson’s stock saw a 3.3 per cent increase, closing at 30p per share following the announcement. Analyst Matthew Saperia of Peel Hunt described the transaction as potentially transformational for the company.
Gagné, who has prioritised realigning the portfolio since joining during the pandemic, emphasised that the sale of the non-core assets would enable the company to concentrate on its primary holdings. Post-sale, Hammerson will retain ownership of ten major shopping centres, including The Oracle in Reading and Westquay in Southampton, valued at approximately £2.7 billion.
The proceeds from the sale will be allocated to repaying £95 million of debt, reinvesting £350 million into the remaining portfolio, and returning £140 million to shareholders through a share buyback programme. Additionally, Hammerson plans to increase its dividend payout ratio from 60-70 per cent to 80-85 per cent of adjusted earnings.
This deal significantly improves Hammerson’s financial stability, reducing its loan-to-value ratio from 44 per cent to 23 per cent. Gagné hailed the transaction as a pivotal moment, positioning Hammerson to capitalise on future growth opportunities.
Read more:
Hammerson divests £1.5bn stake in Bicester Village and other European outlets