Shopping centre owner Hammerson has outlined plans to offload more sites in a bid to raise more than £500m following activist investor pressure.
The disposal programme was outlined in Hammerson’s full-year results for 2018, in which the firm announced a £268.1m loss.
In the year to 31 December net rental income dropped 6.2 per cent from £370.4m at the end of 2017 to £347.5m.
The firm, which owns Birmingham’s Bullring shopping centre and Brent Cross retail park, said adjusted profit fell to £240.3m, a drop of 2.4 per cent from £246.3m per cent this previous year.
Why it matters
The company, which saw its share price tumble 20 per cent last year, has struggled with a challenging market and failed takeover attempts.
Investors rejected a bid for rival Intu shopping centres and a takeover approach by France’s Klepierre.
Expectations for further sales had mounted after reports in the Sunday Times that US hedge fund Elliott Advisors had put pressure on Hammerson boss David Atkins to offload more properties.
The firm said today that it is “open-minded” about the upper limit of the 2019 disposal programme and is in active discussions on transactions with a total value of more than £900m.
What the company said
Chief executive David Atkins said: “2018 was a tough year particularly in the UK. Tenant failures, the structural shift in retail and a more considered consumer created a difficult operating environment, putting pressure on property values.
Outside of the UK our destinations performed better with a strong contribution from premium outlets.
“We believe that a successful deleveraging programme will best position Hammerson for the current environment and beyond. Disposals will also enable us to prove the inherent value of this business – which we believe is not recognised in the current equity market.
“Having successfully achieved £570m of disposals in 2018, we are aiming to dispose of at least £500m in 2019.
“We remain committed to exiting retail parks over the medium term and are in active portfolio-wide discussions on transactions of over £900m, which would add further strength to our balance sheet.
What analysts said
“The company is looking to sell at least £500m in assets this year, to take debt below £3bn, but there is no cap on the disposal plan and Mr Atkins notes that deals with a potential value of more than £900 million are under discussion," AJ Bell investment director Russ Mould said.
“Spending on the purchase of new properties dropped to just £12 million in 2018, below even 2008’s nadir, and development and refurbishment spend fell to £89 million, the second-lowest figure in a decade. Meanwhile, disposals topped £550 million with more to come, so Hammerson does seem to be battening down the hatches as it prepares to meet the retail industry storm head on and seeks to prove that its portfolio is undervalued by investors.