Hammerson scales back as consumers go online


Hammerson scales back as consumers go online


Published Date: 2019-02-26 | Source: Stephen Gunnion | Author: Stephen Gunnion

Hammerson scales back as consumers go online

The shopping centre owner plans to sell more properties as it streamlines its portfolio and pays down debt.

Hammerson plans to sell properties worth more than £500 million as it pays down debt after a tough year for the UK retail property sector. Apart from the UK's looming departure from the European Union, which has weighed on consumer sentiment, more shoppers are going online for their purchases.

This has also affected the investment market in the UK, with property values falling by 9.3% in the second half of the year. For the full year, Hammerson's portfolio declined by 6.6% to £9.9 billion, producing a 12-month capital return of -4.3%.

Last year, the group sold property worth £570 million at an average disposal price of 7% below its December 2017 book value. This helped it reduce debt by a further £179 million to £3.4 billion between June and December. It's targeting net debt of £3 billion by the end of the year. However, due to a fall in the value of its shares, its debt to equity ratio, or gearing, increased to 63% from 58%.

A growing number of tenant failures and retailers applying for Company Voluntary Arrangements (CVAs) resulted in a 1.3% decline in like-for-like growth in net rental income. Occupancy levels at its centres eased to 97.2% from 98.3%. CVAs allow companies with debt problems to reach a voluntary agreement with their creditors.

However, while fewer customers visited its UK flagship destinations, resulting in lower sales, there was increased footfall growth at its French flagship centres and higher sales.

The group swung to a pre-tax loss of £267 million for the year from profit of £412 million in 2017 and it reported an adjusted profit of £240.3 million, down 2.4%. Adjusted earnings per share declined by 1.6% to 30.6p and it's maintained its final dividend at 14.8p per share.

Turbulence in the sector resulted in Hammerson bowing to shareholder pressure last April and pulling out of a £3.4 billion takeover of rival property group intu. Hammerson itself was the target of a potential takeover by French group Klépierre, which declined to make an offer after the two groups failed to agree on price.

Its shares fell 0.1% to R67.38 yesterday.


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