Hammerson in £135m regional buy

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Hammerson has put under offer a 217,754 sq ft regional shopping centre in a strategic deal for the retail REIT, PropertyWeek.com can reveal.

PropertyWeek.com understands that Hammerson, which is fast spending the money it raised from selling its London office portfolio to Brookfield, is under offer to buy the  Victoria Quarter in Leeds. The centre was pulled from the market earlier this year after talks broke down between prospective buyer Deka and its owner, Kennedy Wilson, which controls the Bank of Ireland debt that the scheme is secured against.

Victoria Quarter, Leeds

It is thought that the REIT is planning to pay around £135m for the high-end scheme, which boasts Harvey Nichols and Louis Vuitton as two of its 76 tenants, and which adjoins Hammerson’s forthcoming £650m Eastgate Quarter.

The deal is thought to be close to signing and would give Hammerson control of a huge area of Leeds’s prime retail area. Rents at the scheme have grown since it was originally pulled from the market. L’Occitane paid a zone A rent of £270 on a 2,300 sq ft unit at the scheme earlier this year — a rate not seen in Leeds since 2007. 

The Eastgate Quarter was put on hold in late 2008 but is close to being prelet to proposed anchor tenant John Lewis. Ownership of the Victoria Quarter would allow Hammerson to control the scheme that bridges its Eastgate Quarter with the centre of Leeds, creating a Hammerson-owned “front door” for the 350,000 sq ft first phase of the development.

Deka was in advanced talks last year to buy the 217,754 sq ft scheme for around £125m, reflecting a yield of around 5.5%. Deka had fought off competition from LaSalle Investment Management and Meyer Bergman. However, the consortium that bought the scheme in August 2006, decided to pull it from the market because the price did not match its expectations.

The centre was developed by Prudential in the 1980s and sold to Highstone Estates in the summer of 2001. Highstone then sold the scheme to the Bank of Ireland in August 2006.

It would be the latest in a wave of transactions for Hammerson, which sold most of its London offices to Brookfield in July for £518m. With that money raised, the REIT is in talks to buy not only the Victoria Quarter but also the £265m Junction fund, which is managed by Capital & Regional.

All parties declined to comment.

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