Shopping centre owner to sell stake in Euro arm
BULLRING and Grand Central owner Hammerson is set to raise more than £800 million as it sells its 50 per cent stake in its European shopping centre arm VIA Outlets and asks shareholders to contribute.
The company said the moves would help it pay down a massive debt bill, reducing it to around £2.2 billion, but it will mean a major retreat from parts of the European market where VIA is a major company.
Listed Hammerson owns a string of large shopping centres and retail parks across the UK including Cabot Circus in Bristol, Highcross in Leicester and Victoria Quarter in Leeds.
It also owns 11 premium outlets in nine European countries, with 1,130 stores in total, giving it the third largest portfolio by area on the continent.
Hammerson said it had worked out a deal to sell VIA to its partner APG, a Dutch pension fund for £274 million. Executives are also planning to ask investors to help them out by buying another £552 million of new shares in the company which it will use to pay down debt and invest in transforming the business.
Chief executive David Atkins pronounced the end of the way shops are rented in the UK, saying it was in dire need of change.
“The pandemic has exacerbated structural shifts in retail, exerting further pressure on both property owners and brands and provided further evidence that the UK’s historic leasing model has served its time,” he said.
“It is outdated, needs to change.”
Mr Atkins’ solution includes more flexible leases, setting rents at more affordable levels, tying rents to an index, rather than the current system of reviews, and what the company calls an “omnichannel top-up element”, in short connecting online shopping with physical stores.
“We are introducing a new UK
inflexible and leasing approach, one that is simpler, reflects an omnichannel retail environment and rewards positive performance on both sides,” he said.
“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.” Hammerson said that it had managed to collect 34 per cent of the rent it was due for the third quarter of the year.
It added that it had seen a strong recovery in France and Ireland, where footfall at its flagships and retail parks was only down 18 per cent last month compared to July 2019.
But its UK portfolio relies more heavily on city centre sites which benefit from office workers and public transport links.
The domestic market was more subdued, it said, down 51 per cent in July compared to the same period last year.
Adjusted profit dropped by 84 per cent in the first half of the year to £17.7 million on net rental income of £87.3 million, down by 44 per cent.