Private equity real estate firm Orion is said to be trying to renegotiate the £400 mln (€452 mln) price at a late stage in the transaction.

Hammerson announced on 21 February that it had exchanged unconditional contracts on the sale of the parks to the Orion European Real Estate Fund V and that the transaction was expected to net proceeds of £395 mln.

The retail REIT is raising capital to strengthen its balance sheet and the 205,000 m2 portfolio deal with Orion is supposed to be the company’s exit from the UK retail park sector.

Last week, Hammerson cancelled its dividend and reported that only 37% of rent due for Q2 had been collected in the UK, its biggest market.

The deal with Orion was struck before the coronavirus crisis led governments across Europe to order the closure of shops as well as other business premises. Since then, UK valuers have begun invoking ‘material uncertainty’ clauses into valuations. The Hammerson parks are currently closed except for food stores and pharmacies on some sites.

Sources pointed out that Orion’s move puts Hammerson in a difficult position: ‘Does the company agree to renegotiate the price with Orion? Or does Hammerson keep the deposit from exchange and re-market the assets?’, one said.

The parks are in Didcot, Falkirk, Merthyr Tydfil, Middlesbrough, Rugby, St Helens and Telford. Last month 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.