British shopping centre owner Hammerson is set to buy Intu Properties in a £3.4bn deal, combining London’s Brent Cross, Birmingham’s Bullring and Manchester’s Trafford Centre into one group.
Hammerson, which counts Brent Cross and the Bullring in its portfolio, estimates the purchase will create a £21bn portfolio of European retail and leisure destinations.
It also identified at least £2bn worth of properties across both companies’ portfolios that it planned to dispose, which will be “carried out over the short to medium term”.
As part of the proposed deal, the larger company would keep the Hammerson name, while it will be run by Hammerson chairman David Tyler and chief executive David Atkins.
Intu deputy chairman John Whittaker will become deputy chairman, while John Strachan, chairman at Intu, will join the board as senior independent director. The combined group overall will have six directors nominated by Hammerson and four by Intu.
Atkins said: “This marks an exciting milestone in the history of Hammerson. Bringing together the high-quality portfolios of both companies establishes Hammerson as a larger, leading European retail REIT, enhances shareholder returns and supports opportunities for long-term growth.”
Strachan added: “A combination of both Intu and Hammerson will create a more resilient, diversified and stronger group that we believe will benefit all our stakeholders.”
Data provider GlobalData said that it expected the combined group to “prioritise supermalls development”, since the combined group will own stakes in 12 of the UK’s 20 shopping centres measuring more than 20 million sq ft.
It added that the £2bn asset disposal was unlikely to comprise these ‘supermalls’, since clothing and footwear retailers will direct more spending towards destination shopping centres, away from town centres.
Hammerson posted £346.5m net rental income in the year to 31 December 2016, according to its latest set of full-year results. Its property portfolio during the period was valued at £9.97bn.
Profits dropped by more than half to £317m from £728m in the previous year, but adjusted profit grew by 9.4% to £230.7m.
During the same timeframe, Intu recorded £447m net rental income, but with profit for the year falling by just over two-thirds (66.8%) to £172m. Underlying earnings grew by 7% to £200m. Intu’s properties, including group joint ventures, were valued at £9.99bn.
Properties owned by Hammerson include:
Brent Cross, London
Cabot Circus, Bristol
The Oracle, Reading
Victoria Gate, Leeds
Victoria Quarter, Leeds
Properties owned by Intu include:
Trafford Centre, Manchester
Eldon Square, Newcastle
Merry Hill, West Midlands
Intu Milton Keynes
Victoria Centre, Nottingham