In its annual results statement, Hammerson, the shopping malls giant, highlighted its focus on “portfolio optimization” amidst the challenging times in the UK retail industry. The company has been divesting its properties, with a total value of £542 million sold last year. This strategy has resulted in a decrease in net rental income by 11.2% to £308.5 million and a 10.9% fall in adjusted profits to £214 million. Additionally, Hammerson’s pre-tax loss has widened from £173.3 million to £573.8 million due to the struggling UK retail sector and a write-down of property value, which led to a 19% decrease in net asset value per share to £6.01.
CEO David Atkins emphasized the company’s efforts in reducing debt and reshaping its portfolio over the past year. He believes that in the face of an uncertain retail market outlook in the UK, debt reduction should remain a primary focus for Hammerson in 2020. The company reported a high group occupancy level of 97.2% during the year, which remained unchanged compared to the previous year. The occupancy rate at its flagship properties in the UK and France was 97%, while its Irish flagship properties achieved an impressive occupancy rate of 99.6%. However, Hammerson has been affected by restructuring programs implemented by some of its tenants, resulting in the impact on 234 units, including 149 flagship units, since January 2018. Despite this, 91% of affected UK flagship units are still trading, with 48% of those subject to a Company Voluntary Arrangement (CVA) paying the original rental level, surpassing the market average of 37%.
Hammerson reported that all new UK flagship leasing during the period met its target categories of consumer brands, aspirational fashion, leisure, and food & beverage. The company also experienced an increase in consumer visits to its flagship destinations, indicating the continued desirability of its portfolio. UK flagships saw a 0.6% rise in footfall, French flagships experienced a 1.9% increase, and Ireland saw a figure of 1.8%. Additionally, Hammerson’s premium outlets, including Value Retail and Via Outlets, saw positive performances, with a 9% rise in brand sales and footfall increases of 5% and 6% respectively.
Hammerson remains determined to navigate the challenges of the UK retail industry by optimizing its portfolio, reducing debt, and attracting desirable tenants that align with its target categories. With its ongoing focus on portfolio reshaping and efforts to enhance footfall, the company is striving to strengthen its position in the market and deliver better results in the future.