Hammerson has announced the completion of the sale of its 50% stake in Highcross shopping centre in Leicester to an Asian investor introduced by M&G Real Estate for £236 million.
As previously reported at the time of exchange (the 5th of October 2018), the sale price represents a 5% discount to December 2017 book value.
The completion of the transaction follows successful standard EU competition clearance and the arrangement of a £165.2 million loan by the joint venture. The five year loan is secured on Highcross on a non-recourse basis and the lenders are Helaba (Underwriter and Arranger) and National Westminster Bank. The facility is repayable in full at maturity in February 2024 and the interest cost has been fixed at less than 3%.
Hammerson will use the net proceeds from the sale to reduce drawings under its revolving credit facilities and reduce net debt. The proceeds from Hammerson’s 50% share of the loan (£82.6 million) will also be used to reduce drawings under revolving credit facilities with no impact to group net debt.
David Atkins, Chief Executive of Hammerson, commented:
“We are pleased to have attracted a respected investor who shares our future vision for Highcross. The recent leasing momentum demonstrates that brands continue to open new stores, however the location has to be right, with only the best destinations making the cut”.
“We don’t see this changing anytime soon, and a vibrant brand line-up with the ability to ensure constant variety is fundamental to Highcross’ success as a flagship venue.”
“Given the high quality tenant base we were able to obtain attractive pricing on the Highcross loan and lock in low interest rates. Whilst Hammerson typically funds from the unsecured debt capital markets, this financing continues the use of secured debt on selected joint ventures.”
John Duxbury, Head of Retail & Leisure, M&G Real Estate added:
“We are very pleased to have worked with Hammerson on this. Whilst the retail sector might have its challenges, prime assets in the right locations will be resilient to competition from e-commerce and will provide our investors with long term prospects for income and capital appreciation. With its strong line up of retail and leisure brands, we believe Highcross has a very exciting future.”