BTR Future In Limbo As Hammerson Shopping Centre Goes Into Receivership

Hammerson/Norinchukin Bank’s 1.1M SF Highcross shopping centre in Leicester has been forced into receivership in a move that raises questions over the prospect of converting redundant retail into build-to-rent housing.

Frankfurt-based lender Helaba is understood to have backed out of a pending sale of the centre, which was commenced after a loan covenant was breached, in a move that precipitated the receivership, CoStar reported.

Helaba was lender, underwriter and arranger of a £165.2M loan agreed in 2018 at the time that Japanese bank Norinchukin bought a 50% stake in the centre for £236M. The facility is repayable in full at maturity in February 2024 and the interest cost has been fixed at less than 3%. The centre was valued at £176M at the end of 2021, CoStar said.

Hammerson said in a statement at the time that the £81M net proceeds would reduce its use of revolving credit facilities.

Hammerson had agreed to work with Packaged Living on a 332-unit BTR scheme on the site of Highcross’ empty former 130K SF Debenhams department store, the pioneer development in a cautious move into recycling shopping centre floorspace for residential use.

Planning permission for the Leicester redevelopment was obtained in January 2022.

Hammerson has a land bank of 100 acres of potential BTR development options in major cities across the UK and Ireland, the company said.

Hammerson referred enquiries about the prospects for BTR at Highcross to Savills, the receivers.

Savills said it could add nothing beyond confirming that Matthew Nagle and Kevin Mersh have been appointed joint Fixed Charge Receivers. "Our role is to continue to improve the shopping experience for the public by enhancing the tenant mix and bringing more occupiers to the centre," Nagle and Mersh said in a statement.

Packaged Living said in a statement to Bisnow that the firm was "delighted to be working across a portfolio of projects with Hammerson" but referred enquiries on individual assets to Hammerson.

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