The real estate behemoth, Hammerson, has decided to offload its fashion retail outlets division. This includes a significant interest in Kildare Village in Ireland. The purchaser, a private equity establishment supported by high-end fashion conglomerate LVMH, will acquire this division for £600 million (€712.4m).
The investment firm L Catteron, backed by LVMH CEO Bernard Arnault’s family office, is the principal buyer of Hammerson’s Select Retail entity. It’s proceeding with the purchase via its subsidiary, Silver Bidco Ltd. This entity owns a multitude of stakes in 12 centres throughout the European continent.
Select Retail’s holdings include a 41% stake in Kildare Village, a top-tier designer outlet featuring more than 120 boutique stores like Armani, Michael Kors, Mulberry, and others. Other prestigious properties in its portfolio include La Roca Village in Barcelona, the renowned La Vallée Village in France, and Bicester Village in the UK.
The total enterprise value of Select Retail, inclusive of its debts, is £1.5 billion. Notable shareholders in Kildare Village and other Select Retail assets include Scott Malkin, a prominent New York property magnate and son of the previous owner of the Empire State Building. Malkin is also the chairman and founder of the parent company, Value Retail Plc.
This move marks a significant change for Hammerson, driving anticipated development and value increase. The company intends to use the proceeds to alleviate its debts and reinvest in core central retail properties. Moreover, it plans to initiate a £140 million share buyback scheme, accounting for 10% of its market value, and boost its dividend payout ratio to between 80% and 85% of adjusted profits.
Hammerson’s CEO, Rita-Rose Gagné, who joined the firm in late 2020, has amassedsignificant funds through the sale of non-essential assets in an effort to lower the company’s debts. Hammerson’s stakes have seen a 22% increase in the past year.
Hammerson’s most notable Irish asset is a 50% share in Dundrum Town Centre. Alongside their partner, Allianz Real Estate, they are obligated to refinance €600 million in loans secured on the centre before they are due in September.
The Irish assets of Hammerson, the British property development and investment company, includes a 50% stake in Dublin’s Ilac Centre and the Pavilions shopping structure located in North Dublin’s Swords. It also includes a planned mixed-use scheme for its emblematic site on O’Connell Street. Hammerson experienced revaluation losses equating to around €327 million on Irish assets over a span of four years. The portfolio was around €750 million at the culmination of 2023.
Colm Lauder, the ex-property analyst whose current enterprise Lingard Capital offers strategic advice to some of the largest retail investors spread across Europe, termed the Hammerson outlets’ sale as a “transformative deal.” He further praised the transaction for bestowing Hammerson with the financial stability required to maximise its asset worth in its now concentrated and purposeful retail portfolio in areas including Ireland, France, and the UK.
L Catterton, based in Greenwich, Connecticut, manages $34 billion (€31.3 billion) in assets. Established back in 2016, it’s a collaboration involving consumer-centred private equity firm Catterton, LVMH, the parent company to Louis Vuitton, and Groupe Arnault, the family-run investment company of Mr Arnault.