Hammerson plc and its partners in VIA Outlets, APG, Meyer Bergman and Value Retail, have signed an agreement to acquire, subject to regulatory clearance, four outlet centres across Europe. The retail venues, located close to major cities in Germany, Portugal, Spain and Poland, represent total gross asset value of €587 million and a blended net initial yield of 5.5%. The transaction takes the total size of the VIA Outlets portfolio to €1.1 billion across 10 assets.
VIA Outlets has identified opportunities to drive growth in sales densities and operating income by evolving the brand mix and delivering marketing and tourist initiatives. To support the enlarged portfolio, the VIA Outlets organisational structure has been enhanced through secondments and external hires to expand its asset management, marketing and finance teams. The five-year forecast unlevered IRR for the acquired assets is 11%.
In line with Hammerson’s 47% interest in VIA Outlets, its share of the acquisition funding, taking into account existing centre-level debt financing, will be €170 million. Following the acquisition, Hammerson’s exposure to the fast-growing European outlet market is around 17% of its gross asset value (pro-forma 30 June 2016). The transaction is accretive to forecast EPS and NAVPS. Hammerson’s planned £500 million disposal programme is on track with £435 million already completed. Further disposals have been identified for 2017.
The largest outlet to be acquired is in Zweibrucken, Germany, at 29,000 sqm with 114 tenants. It has sales density of €6,000/sqm and annual footfall is 3.8 million. Located close to Porto, Portugal, the outlet in Vila Do Conde receives annual footfall of 4.3 million with an average sales density of €4,000/sqm. The outlet in Spain is located north east of Seville, has sales density of €3,600/sqm and the annual footfall is 2.0 million.
The outlet in Wroclaw, Poland, is the only retail outlet in the western Poland region and includes 15,800 sqm of retail space and 87 units. The outlet houses brands such as Nike, Tommy Hilfiger, Adidas, Guess and Calzedonia and sits within a wider retail offer. Sales density is €3,300/sqm and annual footfall is 2.8 million.