Hammerson plc to acquire a portfolio of six assets from St. Martins Property Investments Ltd for £208 million

Hammerson plc has reached an agreement for the acquisition of a portfolio of six assets from St. Martins Property Investments Limited. The investment is for a consideration of £208 million. Hammerson's initial commitment, including transaction costs, is £221 million. Passing rents on the properties are £17.2 million, and after taking account of vacancy charges and other direct costs the yield on purchase price is 7.0%.

Hammerson plc will acquire Centrale, Croydon: a 65,000m² shopping centre in Croydon's town centre; Monument Mall, Newcastle: a 9,000m² shopping mall in Northumberland Street in the centre of Newcastle-upon-Tyne; Elliott's Field, Rugby: a 13,000m2 open A1 retail park; Three Spires, Lichfield: a 17,000m² shopping centre forming the City's prime retail pitch; Cathedral Lanes, Coventry: a 6,000m² shopping complex and Wickes, Folkestone: a 4,000m² retail warehouse unit.

David Atkins, Chief Executive of Hammerson, said the firm has a clear strategy of selling mature assets to recycle capital into properties where it can use its skills to generate superior returns. Atkins further stated that the investment is a rare opportunity to secure a group of good properties in strong trading locations with significant asset management potential. According to Atkins, Hammerson believes it can rejuvenate and transform Centrale, Monument Mall and Elliott's Field, thereby improving retailer sales and increasing asset values.

Hammerson believes the acquisition offers it a vital opportunity to secure a group of good assets in strong trading locations. The firm believes there is scope for it to create value through the rejuvenation of the principal assets (Centrale, Monument Mall and Elliott's Field) via development and asset management initiatives.

Centrale, purchased for £98 million, is the largest of the assets. It is situated in the heart of Croydon town centre. Croydon has the 13th largest shopping population in the UK with 455,000 people.

Hammerson plans to create value through investment and transformation of the existing centre. This will include the introduction of new retail tenants, improving circulation between floors and providing both a cinema and catering offer at the centre.

The acquisition will be accretive to earnings in 2011, and will be funded from existing bank facilities, increasing gearing by around 6%. Completion of the acquisition of all assets is expected by the end of March, with the exception Three Spires which is expected to complete later this year. Hammerson is a real estate firm with portfolio in the UK and France of around £5.3 billion at 31 December 2010.

24th March 2011