Hammerson increases stake in Bullring in £300m deal
RETAIL property group Hammerson has increased its stake in Birmingham’s Bullring shopping centre in a deal worth more than £300m.
The group has acquired an additional 16.7% stake in the facility, taking its ownership to 50%. The group said the deal underlined its commitment to prime retail destinations and to “generating income growth through investment in winning sectors of the retail property market”.
In a 50:50 Joint Venture with Canada Pension Plan Investment Board, Hammerson has acquired Future Fund’s 33.3% stake for £307m. Hammerson’s consideration of £153.5m will be paid in cash from existing resources.
The 127,000m2 comprises 167 tenants and passing rents for the whole scheme are £53m per annum. After taking into account purchase costs the net initial yield on the purchase is 5.7%.
Hammerson, as part of a JV with Henderson and Land Securities, originally developed Bullring in 2003, and has managed the centre since opening. Hammerson will continue to have responsibility for asset management and development of the centre.
The group said Bullring is one of the UK’s top ten retail destinations, and continues to attract leading domestic brands, expanding international retailers, and high-quality catering to Birmingham. Anchored by Selfridges and Debenhams, it is over 99% let and attracts around 40m shoppers per annum. Since opening, it said the centre had demonstrated compound annual growth in ERV of 3.5% and passing rents of 5.5%.
In its 10 years, the centre has consistently demonstrated growth in footfall and sales growth. Following the successful leisure extension of Spiceal Street in 2011, Hammerson said there were a number of additional asset management and development opportunities to drive future growth at the centre by further improving the catering, leisure and entertainment offer.
Hammerson’s existing 33.3% stake was valued at £308m in December and the ownership of Bullring is now held by Hammerson (50%), CPPIB (16.7%) and Henderson Shopping Centre Fund (33.3%). CPPIB has a small indirect interest in Bullring through its investment in the Henderson Shopping Centre Fund. The new joint venture is the third partnership between Hammerson and CPPIB.
Commenting on the acquisition, David Atkins, Hammerson Chief Executive said: “This is an excellent opportunity to enhance our position in one of the UK’s strongest shopping destinations at an attractive entry price. Bullring is an iconic centre which has performed extremely well since opening in 2003, and I am confident in the continued future success of Bullring as consumer demand for venues which offer exceptional experiences continues to rise.”
Graeme Eadie, Senior Vice President and Head of Real Estate Investments, CPPIB, added: “This transaction provides CPPIB with further scale and opportunity in Bullring and is in line with our UK retail strategy of investing in high quality assets in major locations with strong growth potential. We are pleased to expand our relationship with Hammerson, one of Europe’s leading retail property companies, whom we know well having worked together successfully on other investments.”