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Hammerson narrows debts as leases rise

Shopping centre giant Hammerson has narrowly slimmed its debts in the first quarter of 2018, as a strong start to the year also saw signed leases rise by 59% despite a “difficult trading environment”.

Net debt was estimated at £3.4bn at 31 March 2018, down from the £3.5bn reported at the end of December 2017. This was thanks to the completion of several disposals for the company.

The first three months of 2018 also saw leasing activity increase compared to the same period last year, up 59% to £7m. The company reported a footfall increase across its shopping centres, up 0.5% in the UK and up 3.5% in France, despite battling against “severe weather and subdued consumer confidence”.

Hammerson also announced it was pressing pause on the deal to buy shopping centre rival Intu following a mooted takeover bid from French shopping centre operator Klépierre. Klépierre offered 615p per share for Hammerson in March this year, which it said represented a premium of around 40.7% to Hammerson’s closing price on 16 March 2018. Hammerson said the board did not intend to finalise the deal, “while Klépierre’s position remains unclear”.

But Hammerson also flagged the potential negative impact of a slew of recent retail CVAs on its performance, which it estimated would reduce net rental income (NRI) by £3.5m in 2018, equalling 0.9% of the total group NRI for 2018. The company said “proactive leasing” was currently underway in order to mitigate the impact.

David Atkins, chief executive of Hammerson, noted that the company had a strong Easter weekend with footfall growth of 5% compared to average reported Easter footfall across all shops of -2.4%.

He also highlighted the challenging retail climate: “Whilst we recognise the difficult trading environment and challenges felt by many retail and restaurant formats in the UK, there continues to be good demand for space across our centres.” 

 

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