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Monday 14 October 2019

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Hammerson reports £320m H1 loss

Written by Peter Walker
29/07/19

Hammerson has reported losses of £319.8 million for the six months to 30 June, compared with a £55.7 million profit during the same period last year.

The shopping centre owner’s results revealed that on an adjusted basis, profits were down 10.5 per cent to £107.4 million. Net rental income also dropped 12.3 per cent to £156.6 million.

The headline loss was due to a £423.4 million net revaluation on its property portfolio during the first half of the year, as continuing market uncertainty and a slowdown in leasing affected value, especially in the UK.

More than half of this was down to its flagship shopping destinations in the UK, which had a revaluation deficit of £266 million.

In France, there was a revaluation loss of £71 million, while the Irish portfolio was down by £30 million. However, premium locations produced a revaluation surplus of £111 million.

Rental income on a like-for-like basis was down 0.1 per cent, but for its UK shopping centres, the decline was 6.8 per cent due to the various Company Voluntary Agreements (CVAs) and administrations from retailers leaving shops empty.

Chief executive David Atkins said that the UK retail landscape is “undoubtedly challenging” and traditional High Street fashion is under pressure.

“However, our focus on shifting our line-up towards categories with greater customer appeal and rental growth potential has resulted in over 90 per cent of new leasing to leading consumer and food and beverage brands.”

Elsewhere in the results statement was news that Hammerson has begun an artificial intelligence (AI) trial at its Westquay shopping centre to monitor customer behaviour.

The site in Southampton has deployed technology from Deepnorth into its existing infrastructure, to “help deliver rich insights for our brands and help us to better quantify the true value of physical space”.

Deepnorth said its products allow retailers and shopping centres to “track, assess, interpret and predict” customer behaviour through various demographic monitoring tools.

In 2019 it has also rolled out chatbots for its shopping centre websites and introduced what it described as affiliate 'Shop Online' portals across its portfolio. These platforms allow customers visiting Hammerson’s shopping centre websites to check stock inventory in individual stores and purchase items for delivery or collection.

Meanwhile, the company stated that it had achieved 90 per cent of its target to sell off £500 million worth of assets. This included a £423 million deal with AXA Investment Management Real Assets for a 75 per cent stake in Paris’ Italie Deux shopping centre, which was announced alongside the results.

Atkins said the absolute priority remains to reduce debt. “We stated our intention to achieve over £500 million of disposals in 2019 and even in this tough environment where deals are taking longer to transact, we are now most of the way there.

“We will continue to pursue additional sales throughout 2019 and into 2020 to further strengthen our balance sheet.”


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