Hammerson results show times are tough, but UK, French flagship footfall rises
Feb 25, 2020
Shopping malls giant Hammerson was focusing on its “further progress in portfolio optimisation" in its annual results statement, which underlined the tough times in UK retail at present.
The company has divested a number of its properties (to the value of £542m last year) and in 2019, net rental income was down 11.2% to £308.5m. Adjusted profits also fell by 10.9% to £214m and the pre-tax loss widened from £173.3m to £573.8m. The company wrote down its property value on the back of the struggling UK retail sector and net asset value per share was down 19% to £6.01.
CEO David Atkins highlighted the “decisive action over the past 12 months to reduce debt and significantly reshape the portfolio. Against a challenged retail and investment backdrop, we have exceeded our 2019 disposal target, exited the retail parks sector as we said we would and reduced debt by a third. This delivered nearly £1bn of transactions in the process. With the outlook for the UK retail market remaining uncertain, we believe we should maintain our focus on reducing debt during 2020.”
So what else happened during the year? On the plus side, the company saw a “continued high level of group occupancy at 97.2%,” although this was simply flat year-on-year. At its UK and French flagships, it was 97%, while Ireland flagships saw an almost-perfect 99.6% occupancy rate.
But the company is being affected by restructuring programmes undertaken by some of its tenants and 234 units (including 149 flagship units) have been impacted this way since January 2018. It said 91% of affected UK flagship units remain trading with 48% of those subject to a CVA paying the original rental level, vs 37% of the market being able to claim this.
And it said 100% of its new UK flagship leasing during the period reached its target categories of consumer brands, aspirational fashion, leisure and food & beverage.
Footfall-wise, consumer visits have risen in flagship destinations, “delivering sustained outperformance of national benchmarks highlighting continued desirability of the portfolio”. UK flagships have risen 0.6%, French flagships 1.9% and in Ireland the figure was 1.8%.
The company has also seen strength in its premium outlets with Value Retail seeing a 9% rise in brand sales and Via Outlets an 8% hike. The footfall rises for these two were 5% and 6%, respectively.
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