A major blow to Hammerson after a sale of Retail Parks has collapsed, however on the plus side, it gets to keep the £21 million deposit that has been held in escrow by its solicitors.
The company had announced the sale of the seven locations to Orion European Real Estate Fund V back in February. With a purchase price of £400 million, in was thought to be the largest single transaction of its kind in the past decade.
But last month, Hammerson said Orion had notified it that it didn’t intend to complete on the retail parks sale. At the time, the UK firm set a deadline of May 6 for the completion, but late on May 5, Orion reiterated its decision.
So far, Hammerson (which owns Birmingham’s Bullring) has sold 14 retail parks, generating £764 million. But its chances of selling the seven properties in question could be lower today, given the coronavirus crisis. And even if the company can sell them, it’s perhaps less likely that it would be able to get a price close to the £400 million it had agreed with Orion.
The collapse of the deal underlines the precarious nature of UK physical retail in 2020. Nobody is expecting a fast bounce-back from the severe downturn, even after the lockdown ends. And many observers have suggested we’re at a turning point that will mean much less physical retail space will be needed in future.
