Hammerson Raises About $652 Million in Share Placing

Hammerson Plc., the U.K.’s third-largest real estate investment trust, raised about 399 million pounds ($652 million) in a share sale to spend on acquisitions and developments. The stock fell the most in 16 months.

Hammerson sold 71.3 million new shares, equivalent to about 10 percent of its share capital, to institutional investors, for 560 pence each, the London-based company said in a statement today. The mall developer also agreed to buy the 40 percent stake it doesn’t already own in the Highcross Shopping Center in Leicester, England, for 180 million pounds.

Hammerson will invest 100 million pounds in Value Retail, the luxury outlet mall developer, as well as a new fund with Value Retail, Dutch pension fund APG and Meyer Bergman that will invest in outlet shopping centers, according to an earlier statement. The deals are expected to add to earnings immediately, the REIT said. It will also use some of the funds to develop shopping malls in London.

“This placing enables us to accelerate our focus on experience, convenience and luxury, the three key areas underpinning our successful retail locations,” Hammerson Chief Executive Officer David Atkins said in the earlier statement. The outlet mall deals give us “access to opportunities in new markets alongside proven partners.”

Highcross Stake

The purchase of the 40 percent stake in Highcross will allow Hammerson to benefit from future rent increases at the mall, Atkins said.

Hammerson was trading at 561.5 pence in London trading at 3:01 p.m., after declining as much as 4.3 percent, the steepest intraday decline since May 23 last year. The shares have risen 12 percent this year, while the FTSE 350 Real Estate Investment Trust has climbed 9 percent. The company has a market value of 4.4 billion pounds.

Hammerson is planning to start work on expanding and upgrading Brent Cross mall in north west London as part of a plan to develop 550,000 square meters (5.9 million square feet) of new space to lease in the U.K. capital.

JPMorgan Cazenove and Deutsche Bank AG acted as joint bookrunners for the placing. Lazard & Co. was financial adviser to Hammerson.

VIA, the new fund with Value Retail, has completed outlet-mall acquisitions in Amsterdam and Prague and is in exclusive talks to buy four more, Atkins said on a call with analysts today. Hammerson has a 47 percent interest in the fund and is targeting an internal rate of return, a measure of profitability, of more than 10 percent, according to a presentation to analysts.

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