Milestone Deal: Hammerson Sells Stake in Value Retail for £600 Million

Hammerson, the British owner of several shopping centers, has agreed to sell its stake in the operator of Bicester Village, Value Retail, for £600 million in cash to L Catterton, backed by LVMH. This long-awaited deal marks a significant step in Hammerson's comprehensive turnaround plan aimed at reducing debt, divesting non-core assets, and modernizing key city-center properties. Rita-Rose Gagné, CEO of Hammerson, emphasized the importance of this transaction: "It is truly a turning point. We have been working on it for a long time." Value Retail operates nine luxury shopping centers near European cities such as Barcelona and Brussels, including the Bicester Village location near Oxford. The divestment of Hammerson's stake comes after a challenging period for shopping center owners, who were severely impacted by the rise of online shopping and the Covid-19 pandemic, leading to a sharp decline in property values. Recently, however, some investors have become more optimistic about these assets, with landlords like Land Securities increasingly looking to acquire large shopping centers at lower prices. Of the £600 million from the deal, Hammerson plans to reinvest £350 million in its core assets, including the Bullring in Birmingham and Brent Cross in London, as well as to increase its stakes in properties where it does not yet have full control. The sale of the Value Retail stake was complicated by the complex structure of the holding, which included both an interest in the company itself and different stakes in individual outlets. Hammerson's investment had been built up since the late 1990s. The deal values Hammerson's stake in Value Retail at an enterprise value of £1.5 billion, representing a multiple of 24 times EBITDA. Eastdil Secured was Hammerson's main financial advisor, while JPMorgan advised L Catterton. The exit from the minority stake was partly due to the lack of control over the company. Gagné noted that the investment had an "extremely complex structure with little to no liquidity." The approval of the buyer by Value Retail's founder, New York businessman Scott Malkin, was crucial to the deal's success. Following further asset sales, Gagné said that the deal "truly opens a new chapter after three years of intense turnaround work." The company will use £95 million to reduce net liabilities, achieving a loan-to-value ratio of 23 percent once the deal is completed. Additionally, it will return up to £140 million to shareholders through share buybacks and increase its dividend to 80-85 percent of adjusted earnings, up from the previous 60-70 percent. L Catterton did not immediately respond to a request for comment. Hammerson's shares rose by about 6 percent in early trading on Monday.