SGS and Debenture/Intu - comment

Hammerson, the UK listed property Company, has confirmed they are in talks with the Swiss entity, Redical Holdings AG, to sell its Victoria Gate and Victoria Quarter shopping centres for £120m. Victoria Gate was built by Hammerson and opened in 2016 for c. £165m. Victoria Quarter was acquired in 2012 for £136m. The combined acquisition/build cost is c. £300m, so the sales price of 40% of cost appears low, especially given Hammerson has an additional landbank at Leeds as well. Without details on rent or yields, it is difficult to read across to SGS and Debenture, but we note that the bond price of SGS equates to 35% of peak asset valuation.

Hammerson had to confirm after the Sunday Times mentioned the rumour yesterday, as part of a wider article on renewed buyer interest in out of town retail parks.