Retail property specialist Hammerson has completed the acquisition of a 50% stake in Manchester Arndale shopping centre, its first major external purchase in more than a decade.
The REIT confirmed in financial results for the six months ended 30 June 2026 that it bought the stake for a headline price of £218 million, reflecting a 7.8% topped-up net initial yield. It was sold by former Intu revolving credit facility investors.
Hammerson said the deal, tipped last week, increases its scale and geographic footprint, adding it expects the asset to be "earnings accretive from day one". The purchase was funded by a £225 million equity fundraise and a retail offer of up to 12.5% of issued share capital.
It will own the asset, which comprises circa 2 million square feet of space, alongside M&G Real Estate. Sovereign Centros from CBRE, on behalf of M&G Real Estate, and Global Mutual, act as joint asset managers of the scheme.
The acquisition comes more than a year after the investors made a move to sell their half of the Manchester mall having formally instructed JLL to find new owners in May last year, revealed by CoStar News, with a quoting price of circa £237 million.
It is understood the formal process ended when interested parties, including Hammerson, disagreed with the timeline of the second phase that was laid down by the investors. The REIT, however, kept tracking the asset and was able to convince the sellers that it was a good party to trade with and completed the deal this summer.
Hammerson chief executive Rob Wilkinson told CoStar News the group was pleased to have finally secured the major retail asset after being on its shopping list for "many, many years". He said: "It totally fits with our strategy in terms of the type of asset, being in a dominant destination, in the city centre, strong catchment and footfall.
"[It also has] synergy with the rest of our portfolio, we don't have presence in Manchester today, so it fits very neatly into the portfolio today, so it just ticked all the boxes – it is right in the middle of the fairway for us in terms of a strategic standpoint".
Wilkinson, who took over from former CEO Rita-Rose Gagné at the end of last year, highlighted the importance of the work completed by his predecessor and the wider team to buy out joint venture partners across five schemes in Europe, the last of these being at Dublin's Ilac shopping centre this month.
He said the purchase of Arndale reflected the next phase in the strategy for the REIT. "It's an evolution, not some revolution of strategy because, if you go back, the role that Rita-Rose and the team did in restructuring the portfolio, selling off non-core, then buying out the JVs was an obvious next step, and this is just the most natural next step as we start to scale the platform.
Wilkinson also explained that the group's first major external purchase in a decade would help to increase efficiencies and helps its earnings, arguing it was not increasing "scale for scale's sake". He suggested that the group was now in a position where it could look outside of UK, Ireland and France at opportunities.
This is already feeding through to its accounts, with Hammerson upgrading its full year European Public Real Estate Association earnings outlook to £132 million from £120 million and issuing new medium term guidance. He said this was also a result of the group's rental income rising by circa 40% during the first half of its financial year and EPRA earning experiencing a 33% rise to £64 million.
He said the group had had a "great first half" which would help to "drive confidence in the full year and beyond. It secured £18.5 million of headline rent, which was 52% above the previous passing rent and 9% above estimated rental value.
The REIT's occupancy across its portfolio totalled 96%, a one percentage point increase year-on-year, and its highest first half occupancy for seven years. The value of its portfolio at the half-year stage was £3.6 billion.
Hammerson recorded International Financial Reporting Standards profit of £56 million during the period, down from £79 million during the same comparable period the year before, while loan to value was 39%. It £75 million of proceeds during the year-to-date from non-core disposals, including the post-period-end partial sale of DublinCentral, which it said was achieved at a substantial premium to book value.
The retail expert also made an initial capital deployment on the design and procurement of The Drum, its office-led scheme in Birmingham, and started initial strip out and preparatory works at Martineau Galleries in Bristol. It clinched resolution to grant planning consent at Cabot Gate, a student-led development in Bristol.
"[The Drum] is one of the things I am very excited about. Since we have been able to buy out partners who, for their own reasons not willing to invest in retail and not move things forward, that is one of the most exciting things to give us flexibility back," Wilkinson said.
"We have now really started to look at the design and spec for The Drum, looking at an office-led, but will multi-use as well, with F&B around it, a new scheme to develop their in the heart of Birmingham city centre."