22nd Jan 2016 09:38
LONDON (Alliance News) - Property developer Hammerson PLC on Friday said it has agreed to acquire the new Grand Central shopping centre in Birmingham for GBP335.0 million, increasing its presence in the Midlands city where it already owns the Bullring centre.
FTSE 100-listed Hammerson had been cited as the most likely buyer of the centre back in December, when The Sunday Times said it had beaten off competition from rivals including British Land Co PLC and Grosvenor Group to acquire the site.
The shopping centre is located atop the revamped New Street train station in Birmingham, which was redeveloped as part of the GBP750.0 million regeneration of the area and which opened in September 2015. The New Street station had been a notorious eyesore Birmingham, infamous for its old, dark concourse which has been replaced with a huge, glass-roofed atrium.
Grand Central is anchored by a 250,000 square foot branch of department store John Lewis and provides 435,000 square foot of retail space, 96% of which has been let. The centre delivers an annual rental income of GBP13.9 million and the purchase price reflects a net initial yield of 4.0%, Hammerson said.
Hammerson said the shopping centre has performed well since opening, with an average footfall of 62,000 shoppers per day in its first three months of trading, which rose to 105,000 per day over the Christmas period. Many of the retailers in the centre have reported trading well ahead of budget since the centre opened, Hammerson said.
Hammerson said the purchase will be backed by an expanded acquisition credit facility of GBP1.1 billion. It added the acquisition illustrates its commitment to the Birmingham market, alongside its existing investment in the Bullring shopping centre, which it bought in 2003.
In addition to the acquisition, Hammerson said it is in advanced talks with an existing joint venture partner on other projects the company owns, about entering into a 50:50 venture for the future ownership of the shopping centre. Hammerson didn't name the partner.
"The acquisition of Grand Central, a highly-prized trophy asset in the UK's second city, is fully aligned with Hammerson's strategy of owning top-performing retail destinations in prime locations, as demonstrated by our recent transactions in Ireland and growing exposure to European premium outlets," said Hammerson Chief Executive David Atkins.
"By deploying our expertise from Bullring, as well as other shopping centres around the UK, Hammerson is well placed to further enhance the consumer offer in Birmingham and achieve high returns through skilful management of Grand Central," he added.
Shares in Hammerson were up 2.1% to 571.50 pence on Friday morning.
By Sam Unsted; [email protected]; @SamUAtAlliance
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