Hammerson confirms talks with Canada's Brookfield on retail park sale

(Sharecast News) - Shopping centre owner Hammerson confirmed it was in talks with Canadian private equity firm Brookfield on a possible sale of its retail parks.
Brookfield is prepared to pay around £350m for seven retail parks, the Sunday Times reported. Hammerson has been battered by retail closures during the Covid-19 pandemic lockdown, with plummeting rental income as stores were shuttered.

"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," Hammerson said on Monday in a statement.

The seven sites include retail parks in Falkirk, Didcot, Middlesbrough, St Helens, Telford, Merthyr Tydfil and Rugby.

Hammerson, which owns Birmingham's Bulling Shopping Centre, posted a £1.7bn loss for its 2020 financial year, with its portfolio value at the end of 2020 down by nearly 36% cent from 2019.

"As announced at its full year results, the company continues to make asset disposals in liquid markets to further strengthen the balance sheet, with gross proceeds of £73m achieved to date in 2021," Hammerson said.

Analysts at Liberum estimated a sale at £350m would be around 3.5% below a December 2020 book value - or 12.5% below the £400m price agreed in 2020 to Orion that fell through in April (2020) - and take Hammerson's year-to-date disposals to £423m, "giving the business much needed capital to pay down debt".

"Any disposal would also reduce the drag of falling values from 6% of the portfolio, increasing our forward net asset value estimates +1% - 2%. However we'd suggest the Retail Park portfolio is the low hanging fruit and more material disposals are needed to fix the balance sheet."

"Given the majority of remaining assets are in JV structures, this may complicate divestment options."