Yahoo Finance Hammerson to shed more assets as it ditches retail parks and trims board amid investor pressure
Shopping centre giant Hammerson is planning to sell another £800m worth of properties by the end of next year as it jettisons its retail parks and shifts its focus on to more “premium” outlets amid pressure from shareholders.
The owner of Birmingham’s Bullring and Bicester Village will also pause work on an extension at its Brent Cross shopping centre in London and buy back shares worth up to £300m as it seeks to reassure investors frustrated with its rejection of a £5bn takeover offer earlier this year.
It also plans to cut its floor space dedicated to department stores by a quarter and high street fashion by a fifth in favour of more “differentiated brands, aspirational fashion, leisure, events and lifestyle spaces”.
David Atkins, chief executive, said the strategy shift was a response to “turbulence” in UK retail after a wave of insolvencies gripped UK high streets.
He added: “We’ve got to react. This is a plan that delivers for all shareholders, accelerating returns but also providing high growth over the long term.”
The FTSE 250 company has already sold off £300m worth of assets so far this year and has now increased its full-year target from £500m to £600m, to be followed by an expected £500m next year.
Management will also be streamlined as investments boss Philip Cole retires and Jean-Philippe Mouton, head of Hammerson’s French business, steps down from its executive board.
The strategy update came alongside Hammerson’s half-year results, which revealed an 80pc plunge in profits to £56m for the six months to June.
Hammerson has come under pressure from shareholders including the activist firm Elliott Advisors after spurning a 635p per share bid from France’s Klepierre in April and aborting a £3.4bn takeover of rival Intu, owner of Lakeside and the Trafford Centre, the same month.
Shares in Hammerson were up 0.9pc to 531p in afternoon trade.
Stifel’s Alan Carter said the update was “pretty underwhelming”, adding: “I remain unconvinced that there is much growth in the business going forward, and certainly not in the short term.”
But analysts at Goodbody said the new strategy was a “step in the right direction” and would help Hammerson shift its portfolio away from weaker parts of Britain’s retail sector.
The UK's high street woes have taken a big toll on landlords, who have had to shoulder the burden of rent cuts agreed through company voluntary arrangements, a controversial insolvency process that has been pursued by the likes of New Look, House of Fraser and Mothercare.
Around 100 of Hammerson’s units have been affected by insolvencies, which it expects to cost it around £5.8m this year, equivalent to 1.5pc of its total passing rent.
Mr Atkins called for a “mindset shift” among retailers and their advisers who he said should stop lumbering landlords with a disproportionate share of CVA costs.
He said: “We’re fully supportive of supporting retailers going forward but we think that burden should be shared more equally across all creditors.”
Mr Atkins said Hammerson had identified the properties it wants to sell but is yet to reveal them for reasons of “commercial sensitivity”.
He denied the decision to pause redevelopment at Brent Cross was a prelude to a sale, adding that Hammerson was still committed to the upgrade but “we don’t believe the conditions are right to start a major four-year development project.”
