Hammerson has agreed a deal to sell its Value Retail outlet operation to LVMH-backed private equity firm L Catterton.
Hammerson said the deal represents a £1.5bn enterprise value for the company’s stake in Value Retail and will generate cash proceeds of circa £600m.
As at 31 December 2023, the gross asset value of Hammerson group’s interest in Value Retail was £1.9bn and for the year ended 31 December 2023 the outlet business, which operates nine luxury shopping centres in the UK and Europe, including Bicester Village, generated profits of £32.1m.
Hammerson said it would use the proceeds from the sale to reduce its net debt; reinvest £350m into assets in its core markets at higher yields and stronger returns, with a priority on JV consolidation and repurposing asset enhancement initiatives; and issue a return of capital to shareholders via a share buy back of up to £140m, representing circa 10% of Hammerson’s market capitalisation.
Rita-Rose Gagné, CEO of Hammerson, said: “This is a transformational deal for Hammerson, generating cash proceeds of circa £600m whilst 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, whilst enhancing returns to shareholders.
“I’m excited about the opportunity this gives us to build on our 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. This is exactly what this transaction will deliver.”
Michael Chu, global co-CEO of 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.”
