Hammerson, a major player in the UK retail property sector, has sold its 40 per cent stake in Value Retail, the owner of Bicester Village and eight other luxury outlet shopping centers across Europe, to LVMH and its private equity arm, L Catterton. , for £1.5 billion. This sale is part of a broader strategy to focus on core assets.
L Catterton, backed by LVMH and the family office of billionaire founder Bernard Arnault, is looking to leverage its luxury retail expertise to strengthen Value Retail’s portfolio. Michael Chu, co-chief executive of L Catterton, expressed his excitement about partnering with Value Retail, citing their substantial experience in luxury investments, including brands such as Sweaty Betty and Gant.
Despite the sale price being almost 25 percent lower than the most recent valuation of the nine shopping centers in key cities including Barcelona, Brussels, Dublin, Frankfurt, London, Paris, Madrid, Milan and Munich, Hammerson will make a net profit of £600 million deliver. cash after deducting debts. This divestment is seen as a strategic shift to focus on large city center shopping centres, a move led by Hammerson’s CEO, Rita-Rose Gagné.
Hammerson’s shares rose 3.3 percent to close at 30 cents per share after the announcement. Peel Hunt analyst Matthew Saperia described the transaction as potentially transformational for the company.
Gagné, who has prioritized portfolio realignment since joining during the pandemic, emphasized that the sale of the non-core assets would allow the company to focus on its primary interests. Following the sale, Hammerson will continue to own ten major shopping centres, including The Oracle in Reading and Westquay in Southampton, worth around £2.7 billion.
Proceeds from the sale will be used to pay down £95 million of debt, reinvest £350 million in the remaining portfolio and return £140 million to shareholders through a share buyback programme. In addition, Hammerson plans to increase the dividend payout ratio from 60-70 percent to 80-85 percent of adjusted earnings.
This deal significantly improves Hammerson’s financial stability, reducing its loan-to-value ratio from 44 percent to 23 percent. Gagné called the transaction a pivotal moment and positioned Hammerson to take advantage of future growth opportunities.