What: Commercial property giant Hammerson completes 'transformational' disposal of its interest in Value Retail, operator of designer outlet villages including Bicester Village.

Why it is important: The sale represents a major shift in Hammerson's portfolio strategy, providing substantial cash proceeds to fund new investments and adapt to changing retail trends amidst broader economic challenges

Hammerson has finalized the sale of its interest in Value Retail, which operates 12 international discount designer malls including Bicester Village, to Silver Bidco, an affiliate of US private equity company L Catterton. This disposal generates approximately £600 million in cash proceeds, which Hammerson describes as "transformational" for its ability to accelerate growth and unlock value-enhancing opportunities.

The company plans to use these funds for organic investment in its core portfolio, consolidation of ownership in core assets and adjacent markets, and accelerating value realization from its strategic land holdings. Hammerson CEO Rita-Rose Gagné emphasized that this marks a significant moment for the company, delivering on a promised turnaround initiated three years ago.

The immediate deleveraging effect of the disposal allows Hammerson to move faster on its strategic priorities. As a result of this transaction, Moody's has upgraded Hammerson's investment grade credit rating from Baa3 to Baa2, while Fitch has updated its outlook to Positive. Additionally, Hammerson successfully refinanced the secured debt on its interests in the Dundrum mall in Dublin.

IADS Notes: While Hammerson is making a significant strategic shift by selling its interest in Value Retail, other players in the retail property sector are showing varied performances. For instance, Unibail-Rodamco-Westfield reported positive results for its UK operations in 2023, with increased tenant sales, improved footfall, and reduced vacancy rates in its London Westfield malls. This contrast highlights the diverse strategies and outcomes within the retail property market. Westfield UK's success, particularly in terms of sales growth and lower vacancies, indicates a robust recovery and growing consumer confidence in certain segments of the retail sector post-Covid, showcasing the resilience and appeal of some physical retail spaces despite broader market challenges.

Hammerson completes sale of Value Retail share