Hammerson’s loss more than doubles

• Mall owner decides to cut its exposure to retail parks in Britain

UK and Europe shopping centre owner Hammerson said on Tuesday its loss in the year to end-December more than doubled to £781.2m (R15bn) amid pressure on the value of its assets due to its bricksand-mortar tenants losing sales to online stores in the UK.

UK and Europe shopping-centre owner Hammerson said on Tuesday that its loss for the year to end-December more than doubled to £781.2m (R15bn) amid pressure on the value of its assets due to its bricks-andmortar tenants losing sales to online stores in the UK.

The company posted a net valuation loss of £828m on its assets in its year to end-December, citing continued market uncertainty and a weak rental market.

The British retail sector has been battered by Britain’s decision to leave the EU as well as the rise in online shopping.

The company kept its final full-year dividend per share unchanged at 25.9p, saying it had beaten its debt-reduction targets amid a rapid sell-off of its UK retail park assets.

But the dividend would be rebased for 2020, down 46% from 25.9p to 14.8p so the company can increase its cash on hand.

The group had targeted debt of £3bn by year-end, and in February had announced the sale of seven additional retail parks for £400m to Orion Real Estate Fund, reducing its debt further. “Against a challenged retail and investment backdrop, we have exceeded our 2019 disposal target, exited the retail parks sector as we said we would and reduced debt by a third,” CEO David Atkins said.

The management of the fifthlargest JSE-listed property company said its focus had been on reducing debt so that Hammerson could rebound when the UK economy gained momentum.

Hammerson MD Mark Bourgeois said Hammerson had cut its debt by about R20bn over the past two years.

“The strategy we put in place in 2018 is coming good,” he said.

“Our debt levels have decreased sharply because of asset sales and we can now focus on improving the returns of our portfolio.

“There are signs of rentals stabilising in commercial property across the UK as the economy recovers from Brexit uncertainty,” Bourgeois said. “We have a secure government now and the Brexit process has begun. Certainty should lead to a recovery in the market value of property assets,” he said.

Hammerson sold more than £500m worth of assets in 2019 and £500m worth in 2018. It now has debt of £2.4bn.

The company’s financial results were well received, and its share price rose 4.26% to R44.29 on Tuesday, bringing its market capitalisation to about R34bn.

But the share price is down 21.65% in the year to date.

But Keillen Ndlovu, head of listed property funds at Stanlib, said Hammerson was still facing challenges.

“The results are a reflection of how quickly the retail property sector has changed, and for the worse, for most landlords.

“This is evident from Hammerson’s big decline in its net asset value, huge disposals as well as a huge dividend cut going forward,” he said.

“There is a need for retail focused landlords to adapt and adjust quickly to save their balance sheets, even if it’s dilutionary in the short term,” said Ndlovu.

Hammerson would continue to make disposals in 2020 but Bourgeois said there was no set monetary target it needed to reach this year.

WE HAVE A SECURE GOVERNMENT AND BREXIT HAS BEGUN. CERTAINTY SHOULD LEAD TO A RECOVERY IN THE MARKET VALUE OF PROPERTY ASSETS