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also people must be aware they have £550m in the bank plus £350 coming in
thats £2.2n minus £900m net debt£1.3b
property value£6.2b
dont see the need to sell anymore
the maths are looking very good
Would be interesting to know what the Asset Value was on those Retail parks.
I am sure the current board would not be selling the assets at the (approximate) 53% discount which the share price is showing against NAV.
So if these assets were sold at their book value (as of the recent write downs) they would be about 5.5% of the total estate (£350m against £6.2b) - the equivalent of just over 2p on the current share price.
That 2p is now cash and will not be discounted by the (bricks and mortar) 53% which should (in a logical market) uplift the share price by 2p tomorrow.
The easiest way to think about this is, if all the assets were sold for cash at their Asset Value, the share price (excluding all other factors) would be 81p (the current NAV).
These were the ones that HMSO had agreed to sell to Orion just before the pandemic for £400m and were in the books at £384m at 31 Dec 2020 (page 112 Annual report & Accounts) if it is the same seven assets.
Very positive news as cash is king at the moment and HMSO's debt has been a worry.
Assuming that there is a read across for valuations (big ask, but let's play) then that would suggest a further hair cut of 10% on the NAV of 82p and 5% for the Scrip Div (which was in essence a bomus issue) then you would get c70p if there was an orderly liquidation of HMSO over the next six months.
Obviously, that's a very crude measure, but should give some comfort that trading at a 50% discount, there's plenty of room for upside, even if it is just asset stripping!
Fair play to R-R-G, she is definately getting the job done. The markets will definately like this.
Mark.
It'll be worth a lot more than 2p on the share price moving forward as it should spur some Institutional interest.
It is not just about the bare value of the assets but it is about the confidence in what R-R-G is doing to quickly transform the balance sheet of HMSO around. That debt pile is reducing nicely all the time.
*Whilst guess what - tomorrow Non-Essential shops reopen (12th April) after nearly 4 months of lockdown.
*10p.m. Closing 6 days per week is there if they want it to garnish sales, profit and pay their
* That USP that bricks and mortar retail has over online shopping, the "see it, feel the quality of the material and try it on" - with changing rooms also sanctioned to reopen should make it a very good weeks.
*Permanently and irreversible reopening in the UK (backed by successful vaccine rollout).
I've been greatly impressed by R-R-G and she is getting on sharpish with transforming this group around.
Definite turnaround "investment play" now.
Not an in-depth recommendation, but another positive from the Motley Fool from yesterday. Definitely starting to gain some momentum on the positivity of the recovery play.
https://www.fool.co.uk/investing/2021/04/10/2-penny-stocks-id-buy-right-now/
I think it's also worth remembering that selling assets liks these not only puts cash in our pocket but reduces our liabilities as well.
Holding on to premium, centrally located sites that can be developed where needed to take better advantage of a booming household market while shedding other liabilities like this is how Hammerson will become agile, efficient and thrive.
@M00la & @latpulldown.
Well said, and nicely worded. I was just about to write something similiar myself after i had finished my brekkie. Time for my cuppa now.
GLA.
Mark.
Full link to the article. https://twitter.com/olivershah/status/1381132405981974530?s=21
Mark.
I wouldn't take any notice of Motley Fool, they are a bunch of crooks. However I have bought HMSO based on recent positive momentum.
I see the sale as a very positive move. Anything to reduce that debt pile. Massive upside from here.
No need for another rights issue for now..
I also see this as share price positive, was this leaked? Thought this would have come out by Rns first.... But good news..
It's good new for sure, but those who a saying that this is proof that RRG is some kind of strategic genius are forgetting that the exact same assets were sold a year ago, for a few million more.
She's just redone the same deal at a lower price.
I expect that she will come good, given the low bar of previous management and her high reputation, but *this* isn't it.
BTW regarding increasing cash in / reducing liabilities - you can do one or the other, but not both.
Selling the retail parks isn't getting rid of liabilities, they are assets and that cash may increase working capital or it maybe used to pay down debt, but not both.
They may not be part of the long term plan, but they have done well in the pandemic and you sell what you can at the best price you can when times are hard.
Ask any Hedge Fund manager!
J P Morgon raises price target to 40p
Confirmation of discussions. Minimum of £350M coming imho.
Shops also getting ready for 9a.m. reopening and many confirming extended closing hours.
NT to Buy. Cheeky blighters.
Small codes and NT on opening says definitely trying to control the price.
It shouldn't matter for the £350 Million on an asset sale for HMSO will further transform the balance sheet and just serves to reinforce the NAV of circa 82p.
Meanwhile its a nice crisp day for shops reopening and I intend to add some footfall.
I think we just identified our culprits for Fridays nobble M00la.
The Times source has a good flavour of the negotiations and £350Mill on the balance sheet will do us nicely.
Won't be selling any now and off to join the queues.
Sorry Lat, not heard the term NT before i know it means Negotiated Trade but does that mean a large order has been placed that needs to be filled? Hence keeping the sp lower?
Hammerson in talks with Brookfield to sell UK retail parks
By David Parsley Mon 12 April 2021
Propertyweek
Hammerson has confirmed it is in talks to sell its UK retail parks portfolio to Canadian investment giant Brookfield for around £350m.
Hammerson saw a £395m deal with Orion fall through as the pandemic struck
The portfolio comprises seven retail parks in Didcot, Falkirk, Merthyr Tydfil, Middlesbrough, Rugby St Helens, and Telford.
Following weekend reports of the deal, Hammerson said: “The company confirms that it is in discussions on terms of a possible disposal of its retail parks portfolio to Brookfield.
“There can be no certainty that a transaction will take place or the terms on which any transaction may occur. The company will provide a further update in due course, if appropriate.”
The bid from Brookfield is lower than the book value for the group’s portfolio, which was valued al £384m at the end of 2020. Last year a deal to sell the assets to Orion Capital Partner for £395m fell through as the Covid-19 pandemic led to uncertainty in the market.
However, Hammerson did retain Orion’s £21m deposit.
When added to the retained deposit from the aborted transaction, a £350m deal with Brookfield would delivers net proceeds of £361m, less than 10% shy of the figure from the Orion deal.
Colm Lauder, an analyst at Goodbody, said: “This is an important transaction for Hammerson as it is a critical element of their balance sheet strengthening process. This is also welcome news as the price mooted will be ahead of market expectations.”
Hammerson has been battling to avoid the same fate as its rival Intu, which collapsed in June. Last year it raised £552m via an emergency rights issue, and a further £274m through the sale of its stake in European business VIA Outlets.