25th Sep 2014 06:45
LONDON (Alliance News) - Hammerson PLC Thursday said it will conduct a share placing to raise about GBP400 million to help fund the GBP180 million acquisition of the rest of the Highcross shopping centre in Leicester that it doesn't already own, a GBP100 million investment in a new outlet shopping centre venture, and GBP120 million to fund existing developments.
In a statement, the retail-focused real estate investment trust said it will place 71.3 million new shares, which is 9.99% of its existing issued share capital.
It said it will buy the remaining 40% of the Highcross shopping centre that it doesn't already own for GBP180 million, representing a net initial yield of 5.5%. It also intends to commit GBP100 million of capital to Value Retail and a new outlet shopping centre venture with Value Retail, APG and Meyer Bergman, the VIA Outlet Fund.
The balance of the funds from the placing, expected to be about GBP120 million, will also be used to "further progress the company's significant pipeline of attractive development opportunities including capital committed to on site schemes of GBP195 million," Hammerson said. It cited London developments like the Brent Cross shopping centre in North London and Whitgift centre in Croydon.
The placing is being conducted through an accelerated bookbuilding Thursday, meaning little or no marketing will be done. Deutsche Bank and JP Morgan Cazenove are joint bookmakers for the placing and Lazard is advising Hammerson.
"The new investment into VIA Outlets and Value Retail will build on our knowledge of this exciting sector and gives us access to opportunities in new markets alongside proven partners. Furthermore, our acquisition of the remaining 40% in Highcross will allow us to capture the full future rental uplift from a number of asset management activities at this strongly performing centre," Hammerson Chief Executive David Atkins said in a statement.
The company will commit GBP70 million towards the new outlet venture, with the remaining GBP30 million of the outlet investment going to Value Retail to help it extend the outlets at Bicester Village and Kildare Village, as well as the new Value Retail village in Shanghai which is due to open in 2015.
"The outlet village market has seen increasing demand from investors due to its consistent delivery of double-digit organic growth," Hammerson said.
"VIA Outlets will provide Hammerson with an attractive opportunity to increase capital deployment to the fast-growing European outlet shopping market and leverage Value Retail's extensive European platform and its relationships with luxury and premium retail brands," it said.
Hammerson expects to have a loan-to-value ratio of 33.9% after the placing, below its target of 40%. "This will provide debt capacity to progress with future development projects," it said.
Hammerson shares closed at 584.50 pence Wednesday.
By Steve McGrath; [email protected]; @stevemcgrath1
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