Hammerson exits office portfolio to focus on retail

Hammerson yesterday announced the sale of most of its portfolio of London office property to Brookfield Office Properties for £518m. The group had announced in February that it wanted to become a specialist retail REIT and become “the best owner-manager and developer of retail property within Europe”.

The City offices assets being sold include 99 Bishopsgate in EC2; the 50% stake in 125 Old Broad Street, also in EC2; Leadenhall Court in EC3; and the development site Principal Place (commercial and residential), EC2. Hammerson said the six sites in total being sold represented 75% of its offices portfolio and noted that the proceeds were 5% above proforma book value and represented a 5.2% initial yield.

Hammerson plans to use the proceeds to invest in retail developments and to make acquisitions in its three chosen areas of focus – prime regional shopping centres, convenient retail parks, and premium designer outlets.

The group said it intended to let its option on London Wall Place lapse at the end of this month, as the scheme did not provide sufficiently high returns. The City of London Corporation will now seek a new developer for the offices scheme at the St Alphage House site. Hammerson is, however, keeping its 50% stake in The Goodsyard in E1, which it says offers an opportunity to generate value through a mixed-use scheme with a significant retail element.

“The remaining London office assets, with a combined December 2011 value of £113m, include: a 30% stake in 10 Gresham Street, EC2, held in a joint venture with CPPIB; Stockley House, SW1; and an interest in Harbour Quay, E14. We intend to dispose of these interests over the next 18 months,” the group added.