Shares in FTSE 250 shopping centre landlord Hammerson (HMSO) fell 4.3% to 35.7p as it revealed it is in talks about selling its portfolio of retail parks to Canadian giant Brookfield as it looks to raise some much-needed cash.

In a short update, Hammerson gave the usual disclaimer that there can be ‘no certainty that a transaction would take place or the terms on which any transaction may occur’.

It added, ‘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 £73 million achieved to date in 2021.’

BROOKFIELD ‘TO PAY £350 MILLION’

Hammerson’s update comes after it was reported in the Sunday Times that Brookfield will pay around £350 million for seven retail parks in Falkirk, Didcot, Middlesbrough, St Helens, Telford, Merthyr Tydfil and Rugby.

Retail parks, given they have large shops suited to handling click and collect orders, have held up relatively well during the pandemic. In the first quarter of this year, Hammerson collected 64% of the rent due at retail parks compared with 36% at UK shopping centres.

Investors haven’t reacted well to the potential sale as offloading its retail parks, which make up 6% of its portfolio, could deprive the firm of some much-needed income. But it needs the cash however to start paying down some of its £2.2 billion in net debt, as it looks to avoid the fate of rival Intu.

Hammerson has been badly hit by the pandemic as its retail and hospitality tenants bore the brunt of lockdown restrictions, which in turn further exacerbated the shift to online shopping.

The firm raised £552 million in a rights issue last September, priced at a 95% discount, and also managed to bring in another £274 million via the sale of its stake in fashion outlet operator VIA Outlets.

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Issue Date: 12 Apr 2021