Hammerson plc has decided to exit the U.K. retail parks sector.
The company has signed a contract with Brookfield to sell its seven retail parks for 330 million pounds ($456.8 million), or an 8 percent discount to its December 2020 book value of 357 million pounds. The transaction is expected to close by the end of May.
The real estate firm earlier this year sold its Brent South Shopping Park for 22 million pounds ($30.5 million) and minority interests in Nicetoile and Espace Saint Quentin for 73 millon pounds ($101.million).
U.K. retail has been hit hard this year from numerous closure and lockdowns and the territory continues to battle the Covid-19 pandemic.
The seven locations that will be acquired by Brookfield are: Central Retail Park in Falkirk; Cleveland Retail Park in Middlesbrough; Cyfarthfa Retail Park in Merthyr Tydfil; Elliott’s Field Shopping Park in Rugby; Telford Forge Shopping Park in Telford; Ravenhead Retail Park in St. Helens, and The Orchard Centre in Didcot.
In aggregate, the total gross proceeds of its 2021 disposals total 403 million pounds ($557.8 million).
Hammerson said on Thursday that the proceeds will strengthen the balance sheet, and reduced net debt, which was at 2.2 billion pounds ($3.05 billion) on Dec. 31, 2020. The proceeds will also increases the firm’s liquidity, which was 1.7 billion pounds ($2.35 billion) on Dec. 31, 2020.
“As highlighted at the full-year results, our immediate priority is to strengthen the balance sheet. This latest disposal is a positive step,” Rita-Rose Gagné, Hammerson’s CEO said. “Alongside this, we continue to focus on delivering operationally. We have successfully welcomed back our customers in England to our flagship venues, with footfall levels well above the June 2020 reopening, and look forward to reopening our other destinations as local restrictions allow over the coming months.”
Hammerson said the total sale price of it seven-unit holding represents a net initial yield of 8.6 percent.
Hammerson operates as a real estate investment trust, but it’s origins are in property development and investment. While many of the British firm’s holdings are in the U.K., it’s portfolio of offices and flagship retail locations also include assets in France, Ireland, Spain and Germany.