Hammerson offloads Value Retail for £1.5bn

Hammerson has sold its share in outlet business Value Retail to L Catterton for £1.5bn. Hammerson will generate around £600m of proceeds from the sale. L Catterton is a partnership between private equity firm Catterton and LVMH, the luxury goods business owned by Bernard Arnault. It has some $34bn (£26bn) of assets under management. The REIT said the sale ensured a “clean exit from a complex structure at an attractive price”. The sale price represents an exit cash yield of 3.4% and a 24% discount to the gross asset value of £2bn. Hammerson said it planned to use around £95m of the proceeds from the disposal to reduce its net debt, would reinvest around £350m into core assets and return capital to shareholders through a buyback of as much as £140m. Chief executive Rita-Rose Gagné said: “This is a transformational deal for Hammerson, generating cash proceeds of £600m while removing an overweight, low-yielding and minority stake, and positioning us for accelerated growth and value creation. “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, while enhancing returns to shareholders.” She added that the cash released as part of the sale would give the business an opportunity to build on its momentum and track record of the last three years. “We are at a point in the cycle where I can now be on the front foot to capture the exceptional value creation opportunities I see in the near, medium and long term,” she said. “This is exactly what this transaction will deliver.” Michael Chu, global co-chief executive at L Catterton, added: “With its high-quality portfolio, reputation for luxury, and commitment to delivering a distinctive experience to customers, Value Retail is well positioned for growth and continued success. “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.” Eastdil Secured advised Hammerson on the sale.