Firm looks beyond Britain for growth

UK-based Hammerson is diversifying away from its home region because of uncertainty around the Brexit process. The group, which reported half-year results to end-June on Tuesday, said it was worried that its UK properties would lose value when Brexit was completed.

UK-based Hammerson is diversifying away from its home region because of uncertainty around the Brexit process.

The group, which reported half-year results to end-June on Tuesday, said it was concerned that its UK properties would lose value when the Brexit process was completed. Ireland and France stood out as two future growth markets as well as parts of Spain where tourism was booming, chief financial officer Timon Drakesmith said.

Hammerson would focus on its large retail centres, as well as its outlet stores, which focused on premium brands.

By 2020, Hammerson will have 60% of its portfolio in Europe and the rest situated in the UK, Drakesmith said.

Hammerson has its headquarters in London and owns a portfolio of malls and outlet centres in England, France, Ireland and Spain, valued at £10.626bn.

The company said the first six months had been difficult, with its interim profit plunging to £55.7m from £287.1m in the comparable period last year, as it faced competition from online retailers and other large mall owners including UnibailRodamco-Westfield, the largest retail asset owner in the world.

As part of Hammerson’s new strategy, it would dispose of about £1.1bn worth of properties by the end of 2019. A total of £300m worth of properties had been disposed of so far in 2018. The disposal programme would see the group’s exposure to Europe, including Ireland, increase about 10%.

Meago Asset Management director Anas Madhi said Hammerson’s new strategy was a sound move, after the property group turned down a takeover offer from French shopping mall owner Klépierre.

The French group tried to buy Hammerson for £5.04bn in April but backed down after the board did not wish to discuss the offer.

This put pressure on Hammerson’s management to demonstrate to the market that it was able to unlock significant value, considering a deep discount that the company’s shares were trading at relative to its net asset value.

“Repositioning flagship retail centres as entertainment destinations across the UK, France and Ireland and the expansion of premium-value outlets benefiting from foreign tourists are steps in the right direction,” Madhi said.