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Hammerson will be disposing of its entire interest in Value Retail – the Bicester Village owner – to Silver Bidco Limited, a Jersey-based company established by affiliates of L Catterton, for £1.5bn to generate cash proceeds of about £600m.
It comes as Hammerson plans to unlock value from 42% from its total portfolio by retiring a historically five-year average cash yield of around 2%.
The group intends to use the disposal proceeds to reduce net debt, reinvest into assets in its core markets at higher yields and stronger returns, and to return capital to shareholders via a share buy back of up to £140m.
In addition, the group has announced its intention to adopt an enhanced payout ratio policy for ordinary dividends of between 80-85% of adjusted earnings following the completion of the disposal.
According to Hammerson, the disposal builds on its “track record and momentum” of the last three years to accelerate strategic and financial delivery.
Rita-Rose Gagné, CEO of Hammerson, said: “This is a transformational deal for Hammerson, generating cash proceeds of c.£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.”
She added: “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, said: “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.”
