Acquisition

Hammerson PLC
02 August 2006


Retail Warehouse Portfolio Acquisition


Hammerson plc has exchanged contracts to acquire a portfolio of retail
warehouses valued at £425 million through the purchase of LxB Holdings Limited,
a property company specialising in out-of-town retail property. Each of the
properties has an open A1 planning consent.


Hammerson will purchase the shares in LxB Holdings Limited and repay shareholder
loans to the company for a total of £199 million. Of this amount, £26 million
will be satisfied by the issue of loan notes to one of the vendors and the
balance from the group's existing resources.


The portfolio provides a combined floorspace of 1.25 million ft(2) (116,000 m
(2)) and currently generates rents of £16.1 million per annum, an average of
£13.90 per ft(2). The current ERV of the portfolio is £19.4 million equivalent
to £16.50 per ft(2). This compares favourably with the average ERV of £23.70 per
ft(2) for comparable UK retail park floorspace. In addition, there are excellent
opportunities to extend and redevelop the schemes to increase the floorspace and
enhance rental values. Hammerson anticipates that these developments could
involve further expenditure totalling £200 million over the next five years.


The portfolio comprises the following properties:

-          Manor Walks, Cramlington, Newcastle;

-          Abbey Retail Park, Newtownabbey, Belfast;

-          The Orchard Centre, Didcot;

-          Seacourt Retail Park, Oxford;

-          a 50% interest in Parc Tawe Phase 1, Swansea.



The vendors are Bank of Scotland Corporate, West Coast Capital (Retail Parks)
Limited, BG Holding EHF and a group of management shareholders.


John Richards, Chief Executive of Hammerson plc, said:


'This acquisition substantially increases Hammerson's critical mass in the
retail parks sector and extends the group's development pipeline for retail
warehousing. The parks in this portfolio all benefit from open A1 consents and
provide a platform for good rental growth. Retailer demand for well configured
retail park space remains strong and we believe such schemes will continue to
outperform.


Hammerson has built up a highly successful retail parks business over the past
four years, including notable development schemes in Gloucester and Merthyr
Tydfil which are now trading.'


Hammerson was represented by Strutt & Parker and Herbert Smith. The vendors were
represented by Clifford Chance.


For further information:


John Richards, Chief Executive, Hammerson plc                Tel:  [phone]


Chris Smith, Director of Corporate Affairs, Hammerson plc    Tel:  [phone]
                                                 [e-mail]


Notes to Editors


1)         Manor Walks, Cramlington, near Newcastle


Manor Walks Shopping Centre and the adjoining Westmorland Retail Park, which
form the core retail area of Cramlington are situated nine miles north of
Newcastle. In total the scheme currently extends to circa 45,700 m(2). Manor
Walks is an enclosed scheme, which links into the Westmorland Retail Park.
Principal tenants include Sainsbury, Asda and Next. The covered mall is
currently let at rents of circa £65 per ft(2) Zone A. The retail park is let at
rents of less than £15 per ft(2).


Although the park has an open A1 planning consent, the majority of tenants are
bulky goods retailers. There is an opportunity to introduce additional high
street retailers to the park. Overall, the scheme has significant development
potential to increase the scale of the food offer and add units suited to larger
space users, including potentially a new anchor store.


2)         Abbey Retail Park, Newtownabbey, Belfast


The scheme is located approximately three miles north of Belfast city centre in
an established retail destination adjacent to a new flagship Marks & Spencer
store. The scheme consists of two phases totalling 23,400 m(2). The majority of
the park benefits from open A1 consent. The scheme, which is anchored by Tesco
and B&Q, is currently let to six tenants at rents between £10 per ft(2) and
£17.50 per ft(2).


The property was developed in two phases, which are currently not connected.
Development proposals have been prepared to integrate both phases of the scheme,
create new retail warehouse units and extend some existing stores.


3)         The Orchard Centre, Didcot


The Orchard Centre provides the main retail offer for Didcot, 14 miles south of
Oxford. It comprises 22,000 m(2) of open A1 retail accommodation set out as a
part open mall, part retail park and anchored by a Sainsbury food store. Prime
rents in the mall are £50 ft(2) Zone A. The retail warehouse units are let at
average rents of approximately £15 per ft(2). There is the potential for
development of over 10,000 m(2) of open A1 retail warehousing and residential
accommodation on an adjacent site.


4)         Seacourt, Retail Park, Oxford


The Seacourt Retail Park is located to the south of Oxford on the Botley Road,
one of the main arterial routes into the city. The area is an established retail
warehouse location with a number of bulky goods parks in the area. The scheme
consists of 7,700 m(2) of retail accommodation benefiting from open A1 consent
and a small office building of 2,300 m(2).


Although the scheme has an open consent, the majority of occupiers are bulky
goods retailers. Rents currently average £22 per ft(2). There is potential for a
major refurbishment and reconfiguration of the space to enhance returns.


5)         Parc Tawe Phase 1, Swansea


Parc Tawe retail park is an edge-of-city-centre scheme in Swansea. Phase 1 of
the scheme extends to 19,900 m(2) and incorporates 5,500 m(2) of leisure uses,
including a cinema. The retail warehousing benefits from open A1 consent.  The
retail park is let at rents of less than £12 per ft(2).


The property is held in a 50:50 joint venture with Land Securities. There is
potential for a mixed-use development incorporating a food store, retail
warehousing and leisure.


6)                  LxB Holdings Limited


LxB Holdings Limited was incorporated on 26 May 2005. The company commenced
trading on 29 June 2005.  The only financial statements published by the company
cover the period from incorporation until 31 December 2005.  The results for
this period, which have been prepared under UK GAAP, show a loss on ordinary
activities after tax of £2.6 million.  In addition, the financial statements
include a revaluation surplus of £13.3 million arising from the company's
investment properties and its investment in Swansea during the same period.


7)                  Acquisition Structure


The acquisition of this portfolio has been structured as the purchase of the
shares of LxB Holdings Limited and its subsidiary companies. The acquisition
price has been agreed at a property value of £425 million, less £15 million for
tax and a deduction of other net liabilities at book value. Acquisition fees are
estimated at £3 million and stamp duty on the shares acquired will be
approximately £0.5 million. None of LxB's directors or staff will be joining
Hammerson.


8)         Rental analysis


Current average ERVs at UK retail parks with a substantial high street presence
are estimated at £23.70 per ft(2) by PMA, based on analysis of figures provided
by IPD.


9)         Information on Hammerson


For further Information on Hammerson and the group's retail parks portfolio,
visit www.hammerson.com.


                      This information is provided by RNS
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