Hammerson, which owns shopping centres including Birmingham’s Bullring and London’s Brent Cross, is in talks to sell off more than £900m of property after being hit by the crisis in Britain’s retail sector.
The FTSE 250-listed firm said it was in active discussions to offload more than £900m of assets, far exceeding its £500m target for 2019. Last year it sold off £570m of property, with the average price 7% below the book value in December 2017.
Hammerson is under pressure from an activist investor, the US hedge fund Elliott Advisors, which owns a 5% stake in the company, to speed up disposals, after a 9.3% decline in its property values in 2018.
Among Hammerson’s tenants are Patisserie Valerie, which went into administration last month but was saved from closure by a management buyout backed by an Irish private equity firm, as well as House of Fraser and New Look. The latter two resorted to company voluntary arrangement to avoid insolvency, which forced the firms to close a string of stores and seek rent cuts from their landlords.
David Atkins, the Hammerson chief executive, said: “2018 was a tough year particularly in the UK. Tenant failures, the structural shift in retail and a more considered consumer created a difficult operating environment, putting pressure on property values. Outside of the UK our destinations performed better with a strong contribution from premium outlets.”
Hammerson’s annual adjusted profit fell by 2.4% to £240.3m in a year that saw it abandon a planned £3.4bn buyout of smaller rival Intu, the company behind the Trafford Centre in Manchester. Hammerson also fended off a £4.9bn takeover approach from the French mall operator Klépierre.
Last week Intu announced a £1.4bn writedown of its assets and suspended its dividend; Hammerson has so far avoided such a revaluation.
Hammerson is focusing on its flagship malls as it battles the shift to online shopping. It said consumers were still visiting such centres “for a big day out” and that luxury sales were still growing strongly.
Elliott welcomed the accelerated disposals programme, along with Hammerson’s decision to seek two additional independent non-executive directors to sit on a newly created investment and disposals committee.
Hammerson has used the sale proceeds to pay down its debts by £179m to £3.4bn since June. It aims to reduce debt below £3bn this year.
