Highcross, the 1 million square foot shopping centre in Leicester that Hammerson sold a 50% stake in to Japan's Norinchukin Bank for £236 million five years ago, has been placed into receivership.
German bank Helaba, the lender to the Highcross Shopping Centre joint venture vehicle, has appointed Matthew Nagle and Kevin Mersh at Savills as receivers to the shopping centre as well as land to the east side of Highcross Street, 7 High Street, and land and buildings lying to the north east of High Street, Leicester.
The joint venture and its lender had been pursuing a consensual sale via CBRE of the mall after its loan-to-value covenant was breached and a standstill agreed in March 2022, according to the last published results on Companies House.
In 2021 Hammerson wrote down the value of its 50% stake in Highcross to nil in its results, in part as the pandemic dramatically hit its performance and a sale was pursued by the lender and the joint venture, and as such the listed REIT is not updating the market on the latest development. Savills will now seek a new asset manager for the mall.
According to a letter set to tenants and seen by the Leicestershire Mercury, Savills was appointed on 9 February and will take on the ownership of the site, rather than its day-to-day running, which is being left to Hammerson for now. More than 100 tenants operate from the mall.
The letter from Savills to tenants published said: “The appointment of receivers does not impact on your day-to-day trading from the property you occupy.
“All income receivable from the centre and all monies payable by occupiers, whether by way of rent or otherwise, is now due to the receivers.” It added that a “consensual handover period” was underway.
The mall was valued at £176.21 million by CBRE as of 31 December 2021.
Hammerson completed a 50% divestment in Highcross Shopping Centre in Leicester to Japan’s Norinchukin Bank for £236 million in 2018, with the new joint venture refinancing the asset with a five-year two-bank senior loan.
At that time, Helaba and RBS subsidiary NatWest extended a £165.2 mllion five-year, non-recourse senior loan. Helaba acted as underwriter and arranger.
The proceeds from Hammerson’s 50% share of the loan (£82.6 million) were used to reduce drawings under revolving credit facilities.
According to the last Companies House results for the Highcross vehicle, for the year ending 31 December 2021, the loss after tax was £62.9 million. The results did suggest there was a material uncertainty over the company's ability to continue as a going concern.
The outstanding loan amount as of December 2021 was £159.2 million. The standstill agreement had been due to expire on 30 September 2022.
Hammerson's plans for a redevelopment of the former Debenhams store at Highcross, St Peter’s Lane, Leicester, into homes for rent will transfer to the new asset manager. Hammerson has worked jointly with private-rented-sector specialist Packaged Living on the project.