Hammerson upbeat despite £517m loss
During the first half of the year, net rental income fell 12.4% to £72.7m but on a like-for-like basis rental income increased by 2%
Hammerson has hailed a “strong performance” in the first half of the year ended 30 June despite experiencing a £517m loss.
It said the loss was due primarily to a reclassification of the Value Retail stake “from a carrying value of £1.1bn” that the company sold on 22 July for gross proceeds of £600m.
The company intends to use the proceeds for a combination of “immediate” significant deleveraging, reinvestment into higher yielding assets, and a return of up to £140m to shareholders via a share buy back.
During the period, net rental income fell 12.4% to £72.7m which Hammerson attributed to the disposals, however, on a like-for-like basis rental income increased by 2%.
Flagship occupancy remained at 94%, or 96% excluding Cergy which remains in lease up. In the UK, Brent Cross, Bullring and Westquay are all over 95% occupied, as are the group’s three destinations in Ireland.
Flagship footfall and like-for-like sales in the UK were up 1% and down 3% respectively, predominantly reflecting the amount of activity Hammerson has undertaken in repositioning assets in recent years.
However, adjusted earnings for the six months of £50m were £6m, or 11% lower than the prior year, with the impact of disposals reducing net rental income by £7m.
In addition, during the period the group signed 140 leases representing £23m of headline rent, £13m at its share, up 24% year-on-year.
Looking into the second half, Hammerson said that the pipeline remains “strong” and reflects the continued investment in repositioning and diversification of its offering, with “key” F&B and leisure deals at advanced stages of negotiation across its estate and forming a significant percentage of the pipeline.
The board has also declared an interim dividend in respect of 2024 of 0.756p pence per share, up 5% year-on-year and a payout ratio of 76% reflecting the group’s “confidence in future earnings growth”.
Rita-Rose Gagné, chief executive of Hammerson, said: “I am pleased to report we’ve had a strong first half. We are realising the benefits of our investments in recent years and with the agreed disposal of Value Retail, we now have the capacity and capability to accelerate growth and value creation. Our leading city centre destinations are in high demand, supported by our ongoing investment and repositioning. This is evidenced by another year-on-year increase in leasing, up 24%. This is driving top line growth with more to come.
“At the same time, we have delivered another outperformance on costs, down 16% year on year. In the first half, we also completed our £500m disposals programme, realigning our core portfolio to leading city centre destinations, whilst further strengthening the balance sheet. We now have a strong, scalable platform as we look to drive further operating leverage.”
Gagné added: “I am excited by the opportunity ahead and confident we will continue to grow the top-line and earnings off our new base, reflected in the 5% increase in the interim dividend.”
