Bicester Village is the jewel in the crown of Value Retail’s global portfolio. (AP Photo/Kirsty … [+]
A private equity firm backed by French luxury fashion powerhouse LVMH Moet Hennessy Louis Vuitton has bought the world’s most luxurious designer outlet group.
L Catterton has agreed to buy UK-based REIT Hammerson’s stake in outlet mall landlord Value Retail, which includes the famous Bicester Village, in a deal valuing the entire portfolio at around $1.9 billion.
The deal includes nine luxury retail properties outside major European cities, notably Bicester Village near Oxford, which has often been touted as the most profitable retail location per square foot in the world and attracts hordes of international shoppers, particularly Chinese consumers, every year.
Other locations include Fidenza Village, Milan; village of Ingolstadt, Munich; Kildare Village, Dublin; La Roca Village, Barcelona; La Vallée Village, Paris; the village of Las Rozas, Madrid; the village of Maasmechelen, Cologne; Wertheim Village, Frankfurt; plus Shanghai Village, Shanghai and Suzhou Village, Suzhou in China.
Opening this September in New York, Belmont Park Village will be the latest addition to ‘The Bicester Collection’, with the company promising landscaped open-air streets, restaurants and cafes and a suite of five-star guest services. Located near Belmont Park Racetrack and UBS Arena.
L Catterton is becoming an increasingly active investor in prime retail properties as it seeks to gain greater control over the best locations for its brands. Headquartered in Greenwich, Conn., the firm manages approximately $35 billion of equity capital across three multi-product platforms: private equity, credit and real estate.
Founded in 1989, the company has made over 275 investments, including Birkenstock, Pepe
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L Catterton supports real estate
The original Catterton Partners, led by co-CEOs J. Michael Chu and Scott Dahnk, merged with the family office of LVMH founder Bernard Arnault (and LVMH in 2016 to become L Catterton, and LVMH owns a 40% stake in the company.
“We have deep experience investing in luxury retail and are eager to leverage our operational expertise and global network of established relationships to partner with Value Retail and drive the business forward,” Chu said when confirming the deal.
The deal is sure to be a coup for L Catterton, with Value Retail holding a collection of prized outlet centers that attract millions of international shoppers, particularly big spenders from China, India and the Middle East traveling around Europe.
The LVMH-backed acquisition of L Catterton reflects a desire to take control of the brand environment.
As in the US, Europe’s designer outlet malls are among the retail destinations most resistant to the rise of online shopping, although mall and office owner Hammerson has long sought to exit its minority 42% stake in the business, partly because of its lack. control over the company.
The deal will generate cash proceeds of just over $775 million for Hammerson, which has been struggling to sell a number of core assets and reduce its debt levels. Hammerson shares rose more than 10% in early London trading on Monday before falling back after the company said it planned to buy back up to $181 million of shares from the proceeds of the sale and raise its dividend payout to 80% to 85% adjusted earnings.
“This is a transformational deal for Hammerson, generating cash proceeds of £600m [$775 million] while removing overweight, low yield and minority stake and positioning us for accelerated growth and value creation. The sale focuses our portfolio on prime urban properties with a transformed capital structure and capacity and ability to deliver on our strategy in higher yield and higher yield opportunities,” Hammerson chief executive Rita-Rose Gagne said in a statement to the London Stock Exchange.
The transaction, which was completed at a 24% discount to gross asset value, will reduce Hammerson’s loan-to-value ratio to approximately 23%. It will leave the company’s portfolio focused mainly on large shopping centers located in the UK and mixed-use developments in urban locations, and the transaction is expected to be completed in the second half of this year.