Hammerson rents fall short across Europe, reassures on liquidity
Malls giant Hammerson updated on the impact of the coronavirus pandemic on Monday and said it has received “a variety of requests for rent deferrals, monthly payments, and waivers, which we are reviewing on a case-by-case basis”.
The firm said it would be “taking into account the business model and risk profile of the occupier, alongside the aid made available by the relevant governments”.
And it has to take into account different polices put in place by a large number of governments. The company owns or has big stakes in a raft of key shopping centres in the UK and Europe. These include the Bullring, Bicester Village, and Silverburn in the UK; Italie Deux and Espace Saint-Quentin in France; and the outlet malls run by Value Retail and Via Outlets in other European countries. In total, its operations span the UK, Ireland, France, Germany, Spain, Portugal, Scandinavia, the Czech Republic, Poland, and Switzerland.
The company said it wants to support its occupiers, “particularly smaller and independent brands that are less resilient to the closure of their space in our centres”.
As far the UK is concerned, by close of play on March 27, it said it had received 37% of rent billed for Q2. When adjusted for rent deferred, switched to monthly payment, and a nominal proportion waived, it has received 57%. That includes Scotland flagships where the rent due day fell a month earlier and it had collected 99% of rents.
“We anticipate both [the 37% and 57%] figures to increase as temporary agreements are implemented and further cash is collected,” it said.
Two of its flagship destinations are fully closed, Victoria, Leeds and Highcross, Leicester. Those essential stores currently trading in the rest of its centres make up around 30 units across the British portfolio, accounting for only around 4% of UK flagship passing rent.
In France, its flagship destinations have been closed since March 15, other than for access to essential stores. These comprise around 15 units across the portfolio, accounting for around 3% of passing rent in the country.
It has offered temporary monthly rent arrangements to all brands in the French flagship portfolio. Payment for April will be deferred, with further guidance from the government on a payment timeline expected before April 15.
Its flagship Ireland destinations have been closed since March 25, again, other than for access to essential retail, which means 25 units accounting for around 8% of local passing rent. It’s in similar talks with tenants there as it is in the UK. Rent is due on April 1 but the company said it’s too early to quantify any potential impact, although it has already received 16% of Q2 rent due.
And currently,17 of the 20 premium outlets held by its interests in Value Retail and Via Outlets are closed. Here too, it can’t currently “quantify the impact of the ongoing disruption caused by Covid-19 on these externally managed and independently financed vehicles”.
The company added that Value and Via (and especially the former) have a higher degree of variable costs that its other properties, most notably marketing spend, which will be cut back in the near term.
So where does this all leave the firm as far as liquidity is concerned? At the end of last year, it had £1.2bn of undrawn committed facilities and cash. On March 25, it drew an additional £100m to provide surplus cash reserves. And its liquidity will be further increased by the net proceeds of £395m on the completion of the sale of seven UK retail parks scheduled to complete on April 23.
Last month, the company had said it would spend around £140 million this year on capital projects, £63 million of it on its developments at Les 3 Fontaines in Cergy and Italik in Paris. These projects are currently suspended. And it has identified other big Capex amounts it can defer, while identifying further significant savings in other areas.
The company won’t be paying a final dividend to its shareholders for last year either and is withdrawing its dividend guidance for 2020.
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