Hammerson hit by retail CVAs and administrations

Hammerson, which owns shopping centres including London’s Brent Cross and Birmingham’s Bullring, reported that net rental income at its UK flagship destinations was down 6.8% in the first half, “impacted by CVAs and administrations”.

At group level retail income edged down 0.1% but at premium outlets it climbed 11.1%.

Hammerson said that “low transaction volumes and a weak UK retail market impacted portfolio valuations”, resulting in capital return being negative 4.4%. UK flagships suffered a negative return of 9.1% and retail parks 10.9%, but premium outlets generated a return of 4.5%. Adjusted profit plunged 10.5% to £107.4m.

The landlord reported, however, that at group level occupancy had been maintained at 96.7% and there was “positive footfall growth across all territories with outperformance of the national footfall index for both UK and French flagships”.

Hammerson said 45 units in its UK flagships were affected by tenant restructuring in the period to June 30, of which 84% were still trading at an annualised rent loss of £1.5m.

Hammerson is repurposing its estate and said 92% of new UK flagship leases were signed to non-fashion and food and beverage brands.

It has also exchanged contracts for the sale of a 75% stake in Parisian shopping destination Italie Deux, and the forward sale of 75% of the location’s Italik extension, for £423m.

Hammerson chief executive David Atkins said: “The UK retail landscape is undoubtedly challenging and traditional high street fashion is under pressure.

“However, our focus on shifting our line-up towards categories with greater customer appeal and rental growth potential has resulted in over 90% of new leasing to leading consumer and F&B brands.

“We’ve seen a stronger performance in Ireland and France, alongside continued exceptional results from premium outlets which demonstrates the benefits of our diversified portfolio.

“Our absolute priority remains to reduce debt. We stated our intention to achieve over £500m of disposals in 2019 and even in this tough environment where deals are taking longer to transact, we are now most of the way there. We will continue to pursue additional sales throughout 2019 and into 2020 to further strengthen our balance sheet.”