Hammerson to exit retail parks as profits plummet

The sector specialist, which pulled out of a proposed £3.4bn takeover of Intu in April, said in its half-year results that it will focus on destination shopping, following an 80% decline in first-half profits to £55.7m.

Hammerson’s major shareholders said in April that due to the declining UK retail sector, they would vote against the bid for Trafford Centre owner Intu, the terms of which had been agreed by the two boards in December 2017.

Net rental income slid by 3% to £178.5m over the first half of this year at Hammerson. The business has already sold off £300m of assets in 2018 and has now increased its full year target of disposals to £600m by the end of this year and £1.1bn by the end of 2019. This week saw £164m raised by the sale of two parks.

Hammerson said that 104 units across its portfolio are in administration or subject to CVAs, and although 87 of them continue to trade, H1 income has been reduced by £2.1m.

Despite this, UK shopping centre trade remains relatively strong, with 97.2% occupancy and a small year-on-year uplift in leasing volumes, from £6.6m in H1 2017 to £6.8m.

Among its out of town holdings is St Helens’ Ravenhead Retail Park, a scheme completed in 2006 that has consent for a further 62,000 sq ft alongside tenants including B&Q, Argos, Next and Boots.

Hammerson will now focus on what it described as “two winning retail segments” in flagship retail destinations and premium outlets as it looks to readjust.

The company, which counts Brent Cross, Bicester Outlet Village and Birmingham’s Bullring as prize assets, plans to reduce department store space by a quarter and high street retail space by a fifth at its holdings, replaced by “differentiated brands, aspirational fashion, leisure events and lifestyle spaces”. The business also introduced its “City Quarters” concept to extract value from the “attractive land surrounding our shopping centres”.

Chief executive David Atkins said: “Our reshaped strategy sees us taking decisive action to further reposition our portfolio. Through increasing the level of disposals, including exiting the retail parks sector, we will now focus solely on winning destinations of the highest quality. These are the venues we believe will maintain relevance and outperform against the shifting retail backdrop.”