Hammerson plc (LON:HMSO) announced plans today to raise up to 10% of its existing share capital through an institutional placing, aiming to fully acquire Bullring and Grand Central in Birmingham for £319 million.
The company will issue new ordinary shares via an accelerated bookbuild. The funds, combined with existing cash and a suspfinished share acquireback, will finance the acquisition of the remaining 50% stake in the prime retail destination.
The acquisition provides Hammerson with complete control over Bullring and Grand Central. The property is one of only five UK retail destinations to achieve an A++ Green Street ranking, highlighting its quality and appeal.
Hammerson anticipates immediate earnings accretion from the deal. The purchase price represents a 4% discount to June book value, with a blfinished net initial yield of 6.7% and a topped-up net initial yield of 7.7%.
Alongside the acquisition announcement, Hammerson upgraded its FY25 guidance. The company now expects approximately 17% growth in gross rental income (GRI) and EPRA earnings of around £102 million.
Pro forma metrics for HY25, including the acquisition, display a loan-to-value (LTV) ratio of around 37% and net debt to EBITDA of approximately 7.9x. These figures are consistent with Hammerson’s investment-grade credit rating.
In 2024, footfall at Bullring increased by 3% to 33 million visitors, with sales up 11%. The positive trfinish continued into HY25, with footfall up 5% and Q2 displaying an 8% increase. June alone saw a 12% year-on-year increase in footfall.
Like-for-like sales have mirrored this growth, increasing by 4% in HY25, with Q2 displaying a 5% rise. Total sales were up 6% in HY25, indicating strong consumer demand at the location.
Hammerson expects that organic growth, acquisitions, cost control, and the share acquireback program will more than offset the earnings lost from the Union Square and Value Retail disposals in 2024.
With the share price shifting lower on the raise out of the gate, HMSO has subsequently shiftd strongly higher, with more than a 6% swing from the low into now.
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