Hammerson to shake up rents after slumping to £1bn loss
SHOPPING centre owner Hammerson is plotting a shake-up of rent charges as it battles to survive after plunging to a £1bn loss.
The Birmingham Bull Ring owner could tie rent to the sales which shops make, as part of an attempt to help tenants cope with a catastrophic slump in footfall, while ensuring it does not miss out financially.
David Atkins, the firm’s chief executive, unveiled the overhaul as Hammerson posted dismal half-year results, including an 8pc slump in the value of its portfolio.
He also announced a £552m rights issue fundraising and £274m sale of its stake in VIA Outlets, a chain of designer sites on the continent. Hammerson is fighting to pay down debts of £3bn.
The company already allows some shops to pay rent based on their turnover, but is considering a wider expansion of this system to replace the old fixed quarterly costs. It could also link payments to click-and-collect sales to ensure a cut of internet revenue. Stores have repeatedly called for a change in how rents are collected, claiming that they struggle to pay bills which date from the pre-internet age because sales have been hoovered up by online rivals.
Mr Atkins said: “The UK’s historic leasing model has served its time. It is outdated, inflexible and needs to change.
“We are introducing a new UK leasing approach – one that is simpler, reflects an omnichannel retail environment and rewards positive performance on both sides.
“It will deliver a sustainable, growing income stream and we are in initial discussions with retailers and anticipate introducing the first of the new leases later this year.”
Shares sank 11pc to 47.4p in late trade, valuing the company at £384m. It means shares have fallen 83pc since the start of the year, in a boost for a string of short-sellers betting on a slump in the value of the business.
Shopping centre owners have been hit hard by the pandemic after tenants were forced to close, starving landlords of rental income. Hammerson’s rival Intu went bust earlier this summer.