Real estate firm Hammerson (HMSO) has posted a sharp increase in adjusted earnings for last year as shoppers returned to its flagship sites.
The shares edged up 1% to 35p, outperforming a weak FTSE 100 which was down 1.8% at mid-morning.
Hammerson, which owns and manages large shopping centres like Birmingham’s Bull Ring and London’s Brent Cross, has made fundamental changes to its business during the past year. The company sold more than £600 million of property assets, strengthening its balance sheet and concentrating its portfolio on prime urban sites.
MAJOR SHIFT
Following the pandemic, the emphasis for retail-oriented property companies is firmly on creating relevant and attractive destinations for shoppers.
Chief executive Rita-Rose Gagne said the group was ‘already seeing the tangible results from our strategy with strong occupier leasing demand, reduced vacancies, improved collections, a lower cost base and clear path to value creation from our land bank’.
Adjusted earnings for the year to December jumped 122% to £81 million from £37 million the previous year thanks to increased net rental income including a ‘strong recovery’ in its Value Retail property portfolio.
Net tangible assets per share were reduced from 80p in December 2020 to 64p at the end of last year due to the programme of asset disposals.
However, net debt was reduced by 19% to £1.8 billion and the firm still had £1.5 billion of undrawn liquidity and cash.
FOOTFALL RECOVERING
The group reported an improvement in customer footfall in all its regions last year after the lifting of restrictions, and a faster recovery in sales by its tenants.
Demand for prime space increased, with the leasing value of its flagship sites up 150% during the course of the year and flagship occupancy at 96% against 93% at the half-year.
Crucially, new rents agreed so far this year have been set above the previous passing rent and in line with the firm’s estimates.
According to the latest data from the British Retail Consortium, footfall in February was down on last year but less so than in January as shoppers shrugged off the winter blues and splashed some cash.
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