Shopping centres lose £2bn in value
Hammerson counts the property cost of virus
BUSINESS: Commercial property business Hammerson has written down the value of its shopping centres by nearly £2bn after Covid-19 led to rental income suffering the biggest fall in the company’s history.
The company said its properties were worth £6.34bn at the end of 2020, compared to £8.33bn a year earlier.
COMMERCIAL PROPERTY business Hammerson has written down the value of its shopping centres and stores by nearly £2bn as Covid-19 saw rental income suffer the biggest fall in the company’s history.
Bosses at the company, which owns Victoria Gate in Leeds, said its properties were worth £6.34bn at the end of 2020 compared with £8.33bn a year earlier.
Net rental income in 2020 fell 48.9 per cent to £157.6m, with adjusted profits at the firm falling 82.9 per cent to £36.5m.
The UK was the worst affected, with flagship sites and retail parks suffering like-for-like declines of 51 per cent and 42 per cent respectively, compared to 18 per cent falls in France and 30 per cent drops in Ireland.
Drops in valuations were particularly hard for shopping centres – down 35.8 per cent – and retail parks were off by 23.3 per cent but the company’s discount outlet retail parks only fell by 6.2 per cent.
Commercial landlords are facing a difficult future with the shift to home-working and most companies expect staff to no longer commute five days a week, making city centres less attractive to tenants.
Rita-Rose Gagne, chief executive of Hammerson, said: “By any measure, 2020 was an unprecedented year with every business and household affected by Covid-19.
As our results show, Hammerson was hit hard. The retail sector, already in the grip of major structural change, has been significantly impacted by the restrictions imposed to tackle the pandemic, and we’ve also seen an increasing number of retail failures.
“Combined, this has resulted in the largest fall in net rental income and UK asset values in the group’s history.”
She added she is hopeful for the future as lockdown restrictions ease and the vaccination rollout continues at pace.
She said: “As a business, Hammerson
provides the places and social infrastructure where people want and need to be, and I am confident it will have a vital role in shaping neighbourhoods and communities in the future.”
The company will sell off more properties and confirmed it will end a joint venture on two shopping centres in France.
Victoria Gate, which Hammerson opened in October 2016, forms part of the Victoria Leeds shopping destination. Anchored by John Lewis’s first store in the city, the arcades are also home to brands including Anthropologie, GANT, Hackett and Joules.