Hammerson will cut its dividend for 2020 by almost half to a “sustainable level” as retailer failings continues to impact its business.
In full year results, the group said it is expecting the dividend for 2020 to be cut by 46%, from 25.9p in 2019 to 14p.
At the end of December, net asset value (NAV) at the group fell by 18.6% to £6.01 per share, down from £7.38 in 2018.
The value of its portfolio plummeted by £828m, and now stands at £8.3bn. Adjusted profit dropped 10.9% to £214m.
Meanwhile, like-for-like net rental income was up slightly by 0.5%, helped by its holdings in premium outlet centres which recorded rental growth of 8.2% during the year. Net rental income at its UK flagship shopping centres, which includes the Bullring in Birmingham, was down 6.7%.
In an effort to address its balance sheet, the retail landlord sold £542m of property in 2019, ahead of its £500m target. The group has also made £433m of disposals to date in 2020, including contract exchanged as part of its exit from retail parks.
The disposals saw pro-forma net debt reduced to £2.4bn, below the £3bn target with headline loan-to-value (LTV) of 35% and gearing of 55%.
David Atkins, chief executive, said: “We have taken decisive action over the past 12 months to reduce debt and significantly reshape the portfolio. 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. This delivered nearly £1bn of transactions in the process. With the outlook for the UK retail market remaining uncertain, we believe we should maintain our focus on reducing debt during 2020. In strengthening our balance sheet further, we will create a more resilient business and also generate significant liquidity which could, at the appropriate time, be deployed to create enhanced returns for shareholders.
“The magnitude of the challenge facing UK retail is significant. However, as brands look to optimise their store estates and strike the right balance between online and physical retail, the best destinations continue to be highly relevant.”
QuotedData has published a report on the retail market that includes a profile on Hammerson and details the structural changes in the wider retail market. To read it click this link.
HMSO : Hammerson to slash 2020 dividend in half