Hammerson plans to reposition its urban shopping centres in future, leaving them with as little as 50 per cent retail space.
Department stores will be repurposed and vacant units redeveloped into homes, hotels and workspaces as the landlord recycles cash from the sale of non-core assets to fund upgrades of its city centre properties.
Rita-Rose Gagné, who joined as chief executive in November, said yesterday that she saw the potential to “reshape entire neighbourhoods” around Hammerson’s premier centres, which include Cabot Circus in Bristol and the Bullring in Birmingham. The strategy is similar to the “city quarters” plan launched by David Atkins, her predecessor, which identified the potential for non-retail development across the 100 acres of land, including car parks, surrounding its assets.
Gagné, 58, said that the difference between the two proposals was that the former was geared more towards development opportunities on the land. “The vision I have is there is something to do before that also in terms of our current assets,” she said. “I have a very condensed vision — probably because I have worked in many markets in the world and I have seen the evolution of ecommerce on retail. It requires a strong view on how these assets should shift.”
She said that Hammerson’s shopping centres could have as little as 50 per cent premium retail, with the remaining space dedicated to services and other uses. While the company will prioritise investing its own capital in the short term, it will consider partnerships down the line.
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Hammerson, which was already suffering from a decline in demand for physical retail before the pandemic, has been whacked by Covid-19 restrictions, which have contributed to sharp declines in rental income and property valuations. The company, whose portfolio is predominantly in Britain but also includes centres in France and the Republic of Ireland, wrote down the value of its portfolio by almost £2 billion after suffering its biggest annual drop in rental income on record. In the first half of this year, the valuation declined by a further £361 million to £5.5 billion.
It suffered a £376 million loss, but that was better than the £1.1 billion loss recorded a year earlier. About 7 per cent of its shops are vacant. Hammerson has collected 71 per cent of rents owed for the first half of the year and 65 per cent for the current quarter.
The company has been selling assets to reduce its debt. It raised £396 million in the first half of the year from the disposal of seven retail parks, Brent South Shopping Park in London, Espace Saint-Quentin in Montigny Le Bretonneux and Nicetoile in Nice. In May, it issued a €700 million sustainability-linked bond to help to repay existing debt.
Gagné said that those actions had given the company a “more solid base to work on as of now. We’re not a forced player any more, we’re not a distressed seller.”
Shares in Hammerson fell by 1¾p, or 4.8 per cent, to 35¾p.
