Hammerson JV buys four European fashion outlets worth £502m

Property investor Hammerson has taken part in a joint-venture purchase of four fashion outlet centres in Europe worth a combined €587m (£502m), in order to expand in the territory.

The company, along with partners APG, Meyer Bergman and Value Retail in their joint venture VIA Outlets, have agreed to buy the outlets, which are close to major cities in Germany, Portugal, Spain and Poland.

The retail outlets worth €587m have a blended net initial yield of 5.5% with an 11% unlevered initial rate of return forecast for the next five years.

With the company’s 47% stake in VIA Outlets, its share of the acquisitions will be €170m (£145m).

The acquisitions also take the total size of VIA Outlets’ portfolio to €1.1bn across 10 assets and Hammerson's exposure to the European outlet market to around 17% of its gross asset value.

The transaction is accretive to forecast earnings per share and net asset value per share.

Timon Drakesmith, chief financial officer and managing director, Premium Outlets, in Hammerson, and chairman of the VIA Outlets advisory committee, said: "This is a rare opportunity to acquire strong outlet centres in an off-market transaction. Well-positioned European outlets continue to deliver strong sales growth supported by an improving customer offer and increasing tourist numbers across Europe.

“Our active capital recycling programme is tilting Hammerson's portfolio towards faster-growth end-markets to reinforce our consistent earnings growth profile."

The largest outlet to be bought is in Zweibrucken, Germany, on the border between France, Germany and Luxembourg with 114 tenants including Versace, Michael Kors and Polo Ralph Lauren. Its sales density is the highest across VIA Outlets’ portfolio at €6,000 per meter squared with annual footfall of 3.8m.

Meanwhile the company said its planned £500m disposal programme is on track with £435m already completed and further disposals identified for next year.