Shopping centre operator Hammerson has posted a 6.9% rise in net rental income for the year to 31 December to £370.4m, with occupancy sitting at a 17-year high of 98.3%.
The rise in rental income boosted adjusted profit at the group by 6.8% to £246.3m.
Leasing volumes grew 34% during the year with increases across all categories. In the UK, leasing activity was up 49%.
The group said it expected consumer spending growth to remain “muted”, partly down to continuing Brexit uncertainty. However, despite weaker retail sales Hammerson said it is seeing “strong levels of leasing activity with stable tenant incentives”.
Hammerson managing director UK and Ireland Mark Bourgeois told Drapers retailers are prioritising higher quality retail venues to showcase their multichannel offerings.
Bourgeois said: “Not all retail is equal. We are focusing on the destinations we think will prosper and grow in this rapidly changing retail property market. Notwithstanding the challenges, the market is polarising towards larger, more experiential destinations.
“The retailers that we are leasing to at a greater rate are athleisure types such as JD Sports, Sweaty Betty, while aspirational brands such as Pretty Green, Gant, Whistles, Hugo Boss, Ted Baker or Levi’s are also comfortable with taking space as they are able to drive online sales, even if store sales are under pressure.
“On the other hand, the proportion of lettings among high street fashion have reduced from around 60% a couple of years ago, to 40% of our lettings.”
Hammerson has been trialling an interactive chatbot service in Reading, which it plans to roll out across the business during the year. It similarly plans to expand an affiliate transactional website that it launched at Birmingham’s Bullring to its other centres within the next few months.
Bourgeois also said its merger with rival centre operator Intu was “progressing well”. There will be a shareholder vote in April, with the transaction expected to conclude in the latter end of the year.
Separately, Hammerson also said it has increased its stake in Value Retail with a £76m investment, which sees it take a 50% holding in Bicester Village.