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Hammerson Plans 825m Fundraising Effort

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Hammerson, the retail property development and investment company which owns some of Britain's biggest shopping centres, has announced its intention to raise £825 million to support the business through the COVID-19 pandemic.

In its unaudited half-year results, Hammerson has announced a proposed rights issue combined with the sale of its 50% stake in VIA Outlets - a collection of 11 designer shopping villages across Europe - to deliver £825m to recapitalise and further reposition the business.

The proposed rights issue is expected to raise gross proceeds of approximately £552 million and the sale of substantially all of the Company’s 50% interest in VIA Outlets to a mutual fund managed by APG Asset Management N.V. (“APG”) for estimated cash proceeds of approximately €301 million (equivalent to approximately £274 million) (the “Disposal”), will raise combined gross proceeds of approximately £825 million.

Prior to Covid-19, Hammerson said it was delivering against its strategy of reducing debt, progressing disposals, and making significant steps to shift the brand mix to better reflect customer demand. Covid-19 has had an adverse impact on the Group’s operational and financial performance. The Board has taken the decision to undertake these significant transactions, enhancing Hammerson’s strategic and financial flexibility, supporting the delivery of a more focused portfolio of flagship destinations and over the medium term its City Quarters development opportunities.

New UK Leasing Approach 

Hammerson is also introducing a new UK leasing approach, based on experiences with brands; current leases in Europe; and the more collaborative approach of premium outlets. This new approach will include: more flexible leases; rebased rents at more affordable levels; indexation replacing the existing rent-review system; and an omnichannel top-up element

David Atkins, Chief Executive of Hammerson, said:

“Today we have announced a series of transactions to recapitalise the business and reduce leverage by a quarter. This will help us to deal with these unprecedented conditions while enabling us to reposition Hammerson further. Looking forward, we will continue to dispose of assets and recycle capital from across the portfolio as we create a business focused on flagship destinations and mixed-use City Quarters over the medium term.    

“The extraordinary disruption caused by Covid-19 on the retail property sector, the economy and society as a whole is reflected in these half year results, however, in recent weeks we have seen an encouraging increase in footfall as confidence begins to return amongst visitors to our flagship destinations.

“The pandemic has exacerbated structural shifts in retail, exerting further pressure on both property owners and brands, and provided further evidence that the UK’s historic leasing model has served its time. It is outdated, inflexible and needs to change.  We are introducing a new UK leasing approach – one that is simpler, reflects an omnichannel retail environment and rewards positive performance on both sides. It will deliver a sustainable, growing income stream and we are in initial discussions with retailers and anticipate introducing the first of the new leases later this year.”

Stephen Delport, CEO of Lighthouse, said:

“Retail has been hit hard by the structural changes taking place in the sector which have been made worse by the impact of Covid-19. However, we have a firm belief, shared by many retailers, that best in class destinations will remain a key part of how and where consumers continue to spend their money.  This is why we are supporting the transactions announced today.”

Source : Insight DIY Team and Hammerson

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10 August 2020

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