Cost-cutting measures at Hammerson, a leading commercial property giant, are resulting in the departure of its managing director for the UK and Ireland, Mark Bourgeois. The company, burdened with heavy debt, is planning to cut up to 40 head office positions. Bourgeois, who has held the role for four years, is expected to leave in the coming weeks. While Hammerson has not officially commented on his departure, his responsibilities will be divided between Harry Badham and chief operating officer Grégoire Peureux.

As part of its efforts to decrease costs, Hammerson has initiated a consultation exercise that affects 250 staff members across its headquarters in London, Kings Cross, and Reading offices. Last year, the company paid a total of £48.9 million to its 538 employees. The report reveals that Hammerson has long been seen as a top-heavy organization within the property industry.

Earlier this year, Hammerson enlisted the help of management consultants McKinsey & Company to aid with its strategic review. In August, the chief executive, Rita-Rose Gagné, announced plans to reduce costs by 15-20% by 2023. In response to the latest job cuts, Hammerson stated that it is conducting an organizational review to create a more agile and efficient business that focuses on its assets, occupiers, and customers.

The pandemic has significantly impacted Hammerson’s retail-focused property portfolio over the past 18 months, with lockdowns and a slow recovery affecting non-essential stores. Despite reporting an increase in adjusted earnings for the first half of this year, the company incurred a record loss of £1.7 billion for the 12 months ending December 31. Hammerson’s current valuation stands at £1.39 billion, with net debts of approximately £1.9 billion.

To improve its financial situation, Hammerson raised £552 million through an emergency rights issue in August 2020 and generated £274 million from the sale of its stake in European shopping villages business VIA Outlets. This year, the company raised a further £330 million by selling seven retail parks to private equity firm Brookfield. Additionally, Hammerson has been reducing rents for its retail tenants to ensure the viability of its centers, with Bourgeois estimating an average reduction of around 30% from their peak.

These cost-cutting measures and organizational changes reflect Hammerson’s determination to navigate through challenging times in the commercial property industry. By reducing head office jobs and implementing strategies to improve efficiency and financial stability, the company aims to position itself for sustainable recovery and future success.

Useful links:

1. Hammerson official website
2. McKinsey & Company official website