Hammerson steps up disposal programme – Hammerson has published results for the year ended 31 December 2018. Highlights were:
- A 4.9% fall in EPRA NAV to 738p
- Impacted by a weaker investment market, UK property values fell during the second half of 2018 by -9.3%, the overall portfolio produced a 12 month capital return of -4.3%
- A 1.6% fall in adjusted earnings per share to 30.6p on the back of a 6.2% fall in net rental income which in turn reflects lower occupancy and falling rents
- Group like for like net rental income growth of 0.3%, with declines at UK flagship destinations (-1.3%) and retail parks (-4.3%) following CVAs and tenant failure. France flagship destinations -0.9%
- A final dividend of 14.8p, unchanged from the previous year. Total dividend for the year up 1.6%
- The French properties did better on average than the UK ones in terms of footfall (recording a 2.5% increase against a 1.8% fall) and retail sales
- GBP570m of disposals realised at an average disposal price of 7% below December 2017 book value. 2019 disposal target in excess of GBP500m but in active discussions on transactions with a total value of over GBP900m
- Further progress on reducing net debt, down GBP179m from 30 June 2018 to GBP3.4bn. Net debt target of GBP3.0bn for 2019 to maintain balance sheet strength
- But an increase in the group’s loan to value ratio – from 36% to 38%, on the back of falling property values but interest cover remains unchanged at 3.4x
- They have a development plan – the “City Quarters platform” to create “vibrant mixed-use neighbourhoods in thriving locations” in the UK and Ireland surrounding their “flagship destinations”. 97 acres of land holdings capable of delivering up to 6,600 residential units, 1,200 hotel rooms and 200,000m(2) of workspace
David Atkins, Chief Executive of Hammerson, said: “2018 was a tough year particularly in the UK. Tenant failures, the structural shift in retail and a more considered consumer created a difficult operating environment, putting pressure on property values. Outside of the UK our destinations performed better with a strong contribution from premium outlets. We believe that a successful deleveraging programme will best position Hammerson for the current environment and beyond. Disposals will also enable us to prove the inherent value of this business – which we believe is not recognised in the current equity market. Having successfully achieved GBP570m of disposals in 2018, we are aiming to dispose of at least GBP500m in 2019. We remain committed to exiting retail parks over the medium term and are in active portfolio-wide discussions on transactions of over GBP900m, which would add further strength to our balance sheet. Over the longer term we will generate opportunities to create additional value through City Quarters, which will see us transform many of our city venues beyond pure retail into successful, thriving neighbourhoods. The job of creating flagship spaces is never done, but through expert management, innovation and investment we are confident in the future of Hammerson and in maximising value creation for shareholders.”
On the UK retail market
“…we estimate that tenant failure has adversely impacted 2018 net rental income by GBP3.0 million, with a further GBP1.6 million adverse impact, based on our current reletting assumptions, expected in 2019. There will be a further reduction in net rental income if there are additional tenant failures in 2019.”
HMSO : Hammerson steps up disposal programme