Hammerson to raise £826m amid overhaul of leasing approach
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Retail landlord Hammerson this morning confirmed it is aiming to raise £826m to help it survive the coronavirus crisis, as it announced an overhaul of its leasing model.
The shopping centre owner will tap investors for £551.7m through a rights issue, and is planning to sell its 50 per cent stake in Via Outlets for £274m.
Hammerson, which posted its half-year results this morning, also said it will introduce a new approach to leasing, saying the current UK system is “not fit for purpose”.
The figures
Net rental income in the six months ended 30 June fell 44 per cent to £87.3m,
Adjusted profit plunged 84 per cent to £17.7m, and earnings per share fell 84 per cent to 2.3p.
Hammerson did not recommend a dividend, but said it intended to resume shareholder payouts in the second half of the year.
Why it’s interesting
Hammerson announced proposals for a rights issue to raise £551.7m. It will also offload its 50 per cent stake in European shopping centre chain Via Outlets to joint venture partner APG for £274m.
The transactions, which are subject to a shareholder vote, will strengthen Hammerson’s financial position and help it implement a new leasing approach in the UK.
Hammerson said the current leasing approach in the UK is not fit for purpose, and will introduce a new, more flexible, system.
The approach will include more flexible leases, rebased rents at more affordable levels, indexation to replace the rent-review system and an “omnichannel top-up element”.
What Hammerson said
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.”
More to follow