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Hammerson seeks £825m to ride pandemic

Shopping centre owner Hammerson has announced it plans to raise £825m through fundraising and disposals as it looks to survive the impact of the coronavirus pandemic.

The announcement comes as Hammerson reported that net rental income dropped by 44% to £87.3m during the first half of the year.

For the six-month period ending 30 June, Hammerson recorded an 84% decrease in adjusted profit to £17.7m after it collected just 72% of H1 2020 rent with 34% of Q3 rent due collected as of 31st July. 

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However, the company added that it managed to maintain a “high level” of group occupancy at 94% (FY 2019: 97%); UK flagships 93%; French flagships 94%; Ireland flagships 96%; Premium outlets 93%.

This is despite 36 of the group’s tenants having entered administration or undertaken a CVA during the period, affecting 88 units (out of 2,886 units across the group) of which 49 continue to trade

Overall Hammerson’s portfolio value dropped by 8% from £8.3bn to £7.6bn.

Alongside it plans to raise funds, Hammerson announced it has launched a new leasing approach which will see it offer “more flexible leases; rebased rents at more affordable levels; indexation replacing the existing rent-review system; and an omnichannel top-up element”.

David Atkins, chief executive of Hammerson, said: “Today we have announced a series of transactions to recapitalise the business and reduce leverage by a quarter. This will help us to deal with these unprecedented conditions while enabling us to reposition Hammerson further. Looking forward, we will continue to dispose of assets and recycle capital from across the portfolio as we create a business focused on flagship destinations and mixed-use City Quarters over the medium term.    

“The extraordinary disruption caused by Covid-19 on the retail property sector, the economy and society as a whole is reflected in these half year results, however, in recent weeks we have seen an encouraging increase in footfall as confidence begins to return amongst visitors to our flagship destinations.”

He added: “The pandemic has exacerbated structural shifts in retail, exerting further pressure on both property owners and brands, and provided further evidence that the UK’s historic leasing model has served its time. It is outdated, inflexible and needs to change. 

“We are introducing a new UK leasing approach – one that is simpler, reflects an omni-channel retail environment and rewards positive performance on both sides. It will deliver a sustainable, growing income stream and we are in initial discussions with retailers and anticipate introducing the first of the new leases later this year.”

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