Hammerson snaps up three Midlands centres in £221m retail deal
THREE major retail developments in the Midlands have been bought by Hammerson as part of a £221m deal.
The centres are Elliott’s Field, Rugby, a 13,000sq m retail park, Three Spires, Lichfield, a 17,000sq m shopping mall and Cathedral Lanes, Coventry, a 6,000sq m shopping complex.
Hammerson has exchanged contracts to acquire a portfolio of six assets from St. Martins Property Investments Limited for £208 million. Hammerson’s initial commitment, including transaction costs, is £221 million. Passing rents on the properties are £17.2 million, and after taking account of vacancy charges and other direct costs the yield on purchase price is 7.0%.
The three other properties are in Croydon, Folkestone and Newcastle-upon-Tyne.
Hammerson said it had taken an “excellent opportunity to secure a group of good assets in strong trading locations, with scope to create value through the rejuvenation of the principal assets via development and asset management initiatives.”
Elliott’s Field Retail Park was bought for £40 million, and comprises 10 units in four terraces, a standalone restaurant and carwash. Tenants include Comet, Halfords, Homebase, and Wickes. Hammerson said it would aim to attract more fashion retailers to improve rental yields.
Hammerson said Three Spires, Cathedral Lanes and the unit at Folkestone, which were purchased for an aggregate £42 million, provide short-term asset management potential to stabilise and protect income.
Hammerson chief executive David Atkins said: “We have a clear strategy of selling mature assets to recycle capital into properties where we can use our skills to generate superior returns. This transaction is a rare opportunity to secure a group of good properties in strong trading locations with significant asset management potential. We believe we can rejuvenate and transform Centrale, Monument Mall and Elliott’s Field, thereby improving retailer sales and increasing asset values.”
The acquisition will be accretive to earnings in 2011, and will be funded from existing bank facilities, increasing gearing by around 6%.
Completion of the acquisition of all assets is expected by the end of March, with the exception Three Spires which is expected to complete later this year.
Hammerson was advised on the transaction by CBRE and Nabarro.
