Hammerson sells its stake in Value Retail for £1.5 billion

Hammerson has sold its 40% stake in Value Retail, the group that owns 12 luxury shopping destinations across Europe, including Bicester Village in the UK, to private equity company L Catterton for £1.5 billion.

“This is a transformational deal for Hammerson, generating cash proceeds of £600 million while removing an overweight, low-yielding and minority stake,” said Rita-Rose Gagné, chief executive, Hammerson. “It will position us for accelerated growth and value creation.”

The company intends to focus its portfolio on “prime urban real estate” and concentrate on “higher-yielding opportunities with stronger returns, whilst enhancing returns to shareholders”.

Hammerson, which owns the Bullring shopping centre in Birmingham, Union Square in Aberdeen and Cabot Circus in Bristol, will use the proceeds from the sale to pay down debt and invest in other assets. It will also return £140 million to its shareholders through a buyback.

As well as Bicester Village in Oxfordshire, Value Retail owns shopping outlets near Barcelona, Brussels, Dublin, Frankfurt, Paris, Madrid, Milan and Munich.

“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,” said Michael Chu, global co-CEO, L Catterton. “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.”

The newly-created private equity company is part-owned by LVMH, the luxury group that controls the Louis Vuitton and Christian Dior brands.

The Value Retail sale is the latest in a series of disposals for Hammerson, that earlier this year sold its 50% stake in its Croydon shopping centre redevelopment to former JV partner Unibail-Rodamco-Westfield, and last year sold Italie Deux, a shopping centre in Paris, to the owners of Ikea.

Following this latest sale, Hammerson will focus its portfolio on urban shopping centres, where it is turning obsolete department stores into mixed-use destinations that offer leisure, food and residential as well as shopping.

“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,” Gagné said.