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Hammerson on how its retail portfolio is changing as the balance between online and stores evolves

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Hammerson today set out how it is rethinking its retail portfolio as shopping habits change, and as rents and profits have fallen in turn. 

Hammerson chief executive David Atkins said the company had taken “decisive action” over the past year to cut its debt levels and to reshape its portfolio. It has moved out of retail parks, with a £400m deal announced this week. It has so far sold property worth £975m including £542m in its 2019 financial year, while its net debt is down to £2.4bn – below its target of £3bn. 

Atkins says that the best destinations remain “highly relevant” even as retail brands look for the “right balance between online and physical retail”. The company owns sites including the Bullring in Birmingham, and Cabot Circus (pictured) in Bristol. 

“The magnitude of the challenge facing UK retail is significant,” said Atkins. “However, as brands look to optimise their store estates and strike the right balance between online and physical retail, the best destinations continue to be highly relevant. This is highlighted by the rise in visitor numbers across all our regions. We remain committed to creating a portfolio of exceptional venues and, as we drive a faster pace of change in shifting our brand line-up and repurposing space, we expect to see improved results in the UK. We will build a strong business for the future with our focus on this, alongside improved performances in France and Ireland, the extensive opportunity offered by City Quarters and the outstanding contribution from premium outlets.”

The update came as Hammerson reported net rents of £308.5m during the year to December 31 2019, down by 11.2% from £347.5m a year earlier. Pre-tax losses of £781m increased from a loss of £268.1m a year earlier. The value of Hammerson’s portfolio fell by 16.2% to £8.3bn from £9.9bn last time in an uncertain retail market. But it said that occupancy at its sites remained high at 97.2%, while footfall to its flagship destinations was up across its UK (+0.6%), Ireland (+1.8%) and France (+1.9%) markets. 

It said that 234 of its shop units had been affected by business restructuring since 2018. But it said that 91% of its UK flagship sites operated by companies that had restructured remained trading. Almost half (48%) of those that had gone through a CVA (company voluntary agreement) were still paying the same amount of rent as before. 

All of the new leases it won during the year were in its target categories of consumer brands, aspirational fashion, leisure, and food and drink.

Now it is focusing its investment on premium sites and plans to take its portfolio “beyond retail” through ‘city quarter’ development schemes that include housing and commercial space alongside shops.

Hammerson said that carbon emissions across its flagship destinations were down by 12%.

Image courtesy of Hammerson

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