Hammerson has sold its 50% stake in Leicester’s Highcross shopping centre for £236m to Japan’s Norinchukin Bank.
The deal was first revealed by EG in June and contracts were exchanged last month. It represents an initial net yield of 5.5%.
The sale price represents a 5% discount to the asset’s book value in December 2017.
At 30 June, Highcross’s occupancy was 96.7% with an annual passing rent of £26.7m. Its anchor tenants are John Lewis, Debenhams and a Showcase Cinema de Lux.
The White Company and Cath Kidston recently opened pop-up units, while this month saw the first restaurant brand sign to take space in the shopping centre, with more to come early next year.
Hammerson chief executive David Atkins said: “The recent leasing momentum demonstrates that brands continue to open new stores. However, the location has to be right, with only the best destinations making the cut.
“We don’t see this changing anytime soon, and a vibrant brand line-up with the ability to ensure constant variety is fundamental to Highcross’s success as a flagship venue.
“Given the high-quality tenant base, we were able to obtain attractive pricing on the Highcross loan and lock in low interest rates.
“While Hammerson typically funds from the unsecured debt capital markets, this financing continues the use of secured debt on selected joint ventures.”
Hammerson said it will use the proceeds from the sale to reduce its net debt and reduce drawings under its revolving credit facilities.
Norinchukin Bank was fronted by M&G Real Estate.
CBRE advised Hammerson.
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