Mon, 28 Feb 2022 | COMMERCIAL PROPERTY
Hammerson Plc, a UK-based real estate investment trust (REIT) focused on shopping centres, has sold two shopping centres and inter-linking buildings in Leeds for £120 million. The REIT has completed the sale of Victoria Gate and Victoria Quarter to Redical Holdings, after confirming last week that it was in talks over selling the non-core assets.
Victoria Quarter is a 209,000 sq ft shopping gallery, while Victoria Gate is a shopping centre covering 405,000 sq ft. The sale also includes the inter-linking Wrays Buildings. The sites, collectively known as Victoria Leeds, comprise more than 80 boutiques, with shops including Harvey Nichols and John Lewis.
The sale price represents a 7.4 per cent net initial yield in line with the book value, as of June 30 2021. The sale comes as Hammerson continues exiting its non-core assets, with proceeds of the deal to be used to reduce the company’s considerable net debt.
Discussing a potential sale last week, Hammerson said in a statement: "Hammerson's strategy remains to realign the portfolio to focus on prime urban estates through disposals of non-core assets, to strengthen the balance sheet, and to re-cycle capital into its core portfolio and its development pipeline.”
Hammerson has embarked on an effort to sell non-core assets as a result of its debt pile, which was reported to stand at close to £2 billion in summer 2021, with shopping centre valuations having plummeted due to the rise of online shopping and the impact of COVID-19.
The REIT sold the Silverburn centre near Glasgow in late 2021 for less than half the sum it acquired the site for in 2009. The £120 million sale of Victoria Leeds also represents a significant loss on Hammerson’s initial investment, with the company having paid £136 million for Victoria Quarter in 2012 before spending a reported £164 million building Victoria Gate ahead of its 2016 opening.
Redical Holdings is a new investment vehicle, which made its first acquisition in September 2021, acquiring Liverpool’s Clayton Square shopping centre in a £21 million deal. The Victoria Leeds acquisition was described by Redical’s strategic advisors RivingtonHark as a long-term investment in a unique retail asset.
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