Hammerson Sells 40 % Share in Bicester Village Owner to Private Equity Fund
Hammerson may finally find relief through the sale of Bicester Village and other high-end shopping “villages”. Under new Chief Executive Rita-
Rose Gagne’s direction since taking over four years ago, it has steadied itself and sold off assets to reduce debt by more than 775 million USD – helping reduce loan-to-value ratio by half to about 23 per cent while providing free cash flow cushioning capabilities and investing in city centre malls as core markets.
Gagne has taken great strides forward with his strategy of streamlining his portfolio and investing in urban shopping centers that offer multiple uses – food, leisure, services retailing and residential alike. This initiative has become even more urgent given visitation numbers dropping drastically across malls due to pandemic-driven shifts towards online retailing or smaller outdoor retail parks.
However, this sale will not provide a silver bullet to the group; underperforming assets in London’s most desirable locations remain. But debt levels will decrease, making room for increasing dividend payments and returning capital through share buyback schemes.
L Catterton, the private equity fund that owns Value Retail shares, boasts an impressive track record in retail with investments in more than 50 brands and 100 shopping centres around the globe. Their European funds have recently invested over $3 billion into retail properties.
Hammerson will use proceeds from this sale to reduce debts, fund other projects and return up to PS140 million back to shareholders via a share buyback programme. Analysts at Peel Hunt predict this sale will bring its net debt-to-core profit ratio down from 8.4 times to just under 6 times – significantly improving its balance sheet and strengthening its balance sheet in turn.
Proceeds will make the group an even more appealing acquisition target, especially those taking a long-term view on retail. In the short term however, investors may remain uncertain as they assess the effects of Brexit on UK economy and consumer confidence. Furthermore, at time of writing shares had not yet been adjusted to account for their trading at a discount to peers, offering buyers an opportunity to acquire cheap shares of one of UK’s leading luxury retailers.
