Hammerson boss David Atkins is about to become the chief executive of the largest listed real estate company in the UK.
His company’s acquisition of Intu will, he says, create a retail giant that will set the benchmark for European retail destinations.
But Atkins is reluctant to take on his new title just yet.
“Not wishing to sound at all negative,” he says “but we have to seek approval from our shareholders first, so I am not quite yet the chief executive. This is an announcement of an offer and we hope that the deal will close over the summer, but that will take quite a bit of time.”
Once the deal has closed, Atkins plans to use the additional scale of Intu’s portfolio to augment Hammerson’s existing holdings, creating a European retail portfolio worth £21bn.
High-quality retail destinations
“It is a portfolio of high-quality retail destinations and it is exciting because it creates a bigger platform and more access to retail destinations as well as adding Spain to our portfolio. The time was right,” he says.
“This is about bringing the best of both companies together. We think that our approach to retail, with the bigger scale, means we will be able to provide a better service to retail and provide more in the way of experience to our consumers, more demand for our retailers and more returns for shareholders,” he adds.
One of the key and most notable strategies of the merger will be the re-branding of all Hammerson shopping centres to Intu.
“From a branding point of view, we think the merger gives clear benefits to the consumer and we intend to roll that out across the portfolio, which will take a bit of time. But we will move as quickly as we can.”
In order to raise funds for further acquisitions as well as streamline both portfolios, the combined companies need to dispose of around £2bn of assets.
Atkins says: “We will dispose of around 10% of the combined portfolio to reduce debt and to be able to re-invest in premium outlets.”
This is something that will happen gradually over the next two to three years, but Atkins is hesitant to reveal any particular assets to be sold off.
Compiling a disposals list
“I would say that we have a candidate list of disposals and we have done a lot of due diligence. We review all of our own fundamentals to provide an assessment for future performance and have one or two that fall below that line and those are the ones that we will dispose of,” he says.
Hammerson owns 18 properties sized more than 1m sq ft, and while the size of assets will not determine the disposal strategy exclusively, it will play a part. “The larger assets will be what we will focus on,” he says.
More intrinsic to the strategy will be location. The new business will be targeting the best cities, rather than countries in Europe. “Twenty percent of the portfolio will be based in higher-growth markets and 43% of the portfolio will be positioned in a top 20 European city,” he says.
Hammerson already has a European presence, most notable in France, and he hopes that the merger will expand this.
Atkins says: “We are in 14 countries and so we are far more European than people give us credit for. We have a good exposure and strong growth catchments.
Catchments and cities
“We do think about catchments and cities, so if there were opportunities going forwards in cities where we don’t have representation or the ability to upscale what we own, then absolutely we would make that move. This is a proactive proposition that will see Hammerson become even more influential in European retail over the coming decade,” he says.
However, this will mark Hammerson’s first foray into the Spanish market. One of the key development acquisitions that Hammerson will gain from the merger is Intu’s 2m sq ft shopping and entertainment complex development in Torremolinos, near Malaga.
Atkins is confident about the opportunities in Spain ahead. “I think the Torremolinos scheme could set a new benchmark for retail development across Europe,” he says. “We are excited about getting involved with that.”
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