Hammerson seeks to raise £825m as rental income plummets

The property giant is looking to strengthen its financial position through a proposed rights issue, as well as the sale of the company’s 50% stake in VIA outlets, in a bid to raise a combined £825m cash influx.

VIA Outlets is a joint venture between Hammerson and APG which comprises 11 outlets across nine countries and is the third-largest premium outlet operator in Europe. In the last six months, the business division has swung to a £20.9m loss.

Hammerson has been battered by the impacts of the coronavirus pandemic, with its net rental income down 44% on a like-for-like basis to £87.3m in the six months to June 30 due to forced closures, reduced rental collections and agreements, and administrations.

The property group’s adjusted profit slumped 84% year-on-year to £17.7m, while the value of its overall portfolio value fell 8% to £7.7bn.

As well as the proposed fundraising, the landlord plans to introduce more flexible leasing models and renegotiate rent prices. The group also said it ”intends to increase the scope of its disposal programme as soon as market conditions stabilise.”

Chief executive David Atkins 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.

“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 It is outdated, inflexible and needs to change.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 omnichannel 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.”