Shopping centre owner Hammerson will reduce department store space by 25% as part of its disposal programme to reduce debts by £500m.
“We’re actively working on reducing and repurposing our department store space by 25% as a medium-term objective,” managing director of UK and Ireland, Mark Bourgeois, told Drapers. “We’ve already delivered that at House of Fraser in Leicester, and have done some good work with Debenhams reducing its space in Reading.”
In 2017, Hammerson took back the House of Fraser in Highcross, Leicester to repurpose the 118,400 sq ft three-floor store, replacing it with an upsized Zara and JD Sports alongside leisure and restaurant facilities. Since the stores opened in September 2018, that area of the shopping centre has experienced a 12.5% uplift in footfall compared with the previous year.
Working with Debenhams at The Oracle in Reading, Hammerson has facilitated the sub-letting of space on the lower level to two restaurants.
Today Hammerson announced its disposal programme to offload more than £500m of assets over the next 12 months via portfolio sales, joint ventures and asset disposals including a “limited number” of retail parks. It also established an investment and disposal committee to oversee the programme.
Continued company voluntary arrangements across the industry have made it a difficult year for Hammerson. Adjusted profits fell by 2.4% to £240.3m for the twelve months to 31 December 2018.
“We have had a significant level of CVAs across the portfolio, but of the 85 stores impacted only ten to fifteen have closed, due to our strong locations,” Bourgeios said.
“It’s a challenging investment market right now, we sold Leicester at about 5% reduction and the last two retail parks were sold about 10% reduction on book. However, we remain confident.”