Property giant Hammerson has agreed to sell its fashion outlets business, including a large stake in Kildare Village in the Republic, to a private equity firm backed by luxury goods group LVMH for £600 million (€712.4m).
L Catteron, which is also backed the family office of LVMH chief executive Bernard Arnault, is buying the Hammerson Select Retail unit, which owns a series of stakes in 12 centres across Europe, through a vehicle called Silver Bidco Ltd, the British property group said..
This includes a 41 per cent in the Kildare Village designer outlet, which opened in 2007 and is home to more than 120 boutiques including Armani, Michael Kors, and Mulberry. The portfolio also includes La Roca Village in Barcelona, the famous La Vallée Village in Paris and Bicester Village in England.
Select Retail has an enterprise value, including debt, of £1.5 billion. Scott Malkin, a New York property heir whose father owned the Empire State Building, is also a big shareholder in Kildare Village and other outlets in the Select Retail portfolio as chairman and founder of Value Retail Plc, the holding company over the assets.
“This is a transformational deal for Hammerson, generating cash proceeds of £600 million whilst removing an overweight, low yielding and minority stake, and positioning us for accelerated growth and value creation,” said Rita-Rose Gagné, chief executive of Hammerson.
Hammerson plans to use the proceeds from the deal to reduce debt and reinvest in core prime urban retail property, launch a £140 million share buyback programme, representing 10 per cent of its current market value, and increasing its dividend payout ratio to 80-85 per cent of adjusted earnings.
Ms Gagné, who joined Hammerson in late 2020, has raised hundreds of millions of pounds selling off noncore assets in recent years in order to pay down debt and refocus the company. Shares in the company are up 22 per cent over the past 12 months.
Hammerson’s flagship Irish asset is its 50 per cent stake in Dundrum Town Centre. The company and its joint venture partner, Allianz Real Estate, must refinance €600 million of loans secured against the centre before they fall due in September.
The value of the Irish portfolio also includes 50 per cent stakes in the Ilac Centre in Dublin city centre and the Pavilions shopping complex in Swords, north Co Dublin, as well as a mixed-use scheme planned for its landmark O’Connell Street site.
Hammerson booked the equivalent of €327 million of revaluation losses against Irish assets over the past four years. The portfolio stood at about €750 million at the end of 2023.
Colm Lauder, a former property analyst, whose new firm Lingard Capital provides strategic advisory to some of Europe’s largest retail investors, described the outlets’ sale as a “transformational transaction” that gives Hammerson “the balance sheet strength to look to maximise value in its now streamlined and focused destination retail portfolio in Ireland, France and the UK”.
Headquartered in Greenwich, Connecticut, L Catterton manages $34 billion (€31.3 billion) in assets. It was created in 2016 as a joint venture between consumer-focused private equity firm Catterton, Louis Vuitton owner LVMH and Groupe Arnault, Mr Arnault’s family office investment company.
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