Hammerson to terminate sale if Orion fails to close retail park deal by May 6

UK REIT Hammerson said it is giving buyer Orion another two weeks to complete on a £400 mln retail park deal agreed in February before terminating the deal and cashing in a £21 mln (€24 mln) deposit.

PropertyEU revealed on 2 April that private equity firm Orion was trying to renegotiate the price of the transaction which was signed through Orion European Real Estate Fund V before the coronavirus crisis. Orion was required to close the 205,000 m2 portfolio acquisition by April 23 but ‘notwithstanding continued preparation between legal and property teams up until today, it has notified Hammerson this morning that it does not intend to complete the transaction on 23 April’.

As such, Hammerson said that it would now serve a notice to complete on Orion specifying that completion must occur by no later than 6 May 2020. ‘If completion does not occur by such date, Hammerson will take steps to terminate the SPA and the £21 mln deposit which is currently held in escrow will become immediately due and payable to Hammerson,’ the London-based property company said, adding that it ‘remains ready and able to comply with its completion obligations under the sale and purchase agreement, and is in dialogue with its counterparties at Orion’.

The transaction was supposed to mark Hammerson’s exit from the UK retail park sector.

The parks are in Didcot, Falkirk, Merthyr Tydfil, Middlesbrough, Rugby, St Helens and Telford. In February Hammerson said the sale would be the largest of its kind in the UK for a decade and that the £400 mln sales price equated to a net initial yield of 8.9%, a 22.8% discount to 30 June 2019 book value.

Morgan Stanley has been advising Hammerson.

According to those who track the market, Orion was not the only party interested in the portfolio and should Hammerson pursue a new sale, it might be successful. However, given the substantial change in the assets’ performance lately and the unclear outlook for the future, pricing will have to be reconsidered.


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