The shopping centre owner Hammerson has announced plans to raise more than £825m through a cash call and the sale of its stake in discount shopping outlets, to help it survive a crisis in retail accelerated by the coronavirus pandemic.
The property group, which owns the Bullring in Birmingham and the Brent Cross shopping centre in north London, has a £3bn debt burden and said this month it was considering measures to manage its costs and cashflow.
Hammerson said it would change some of the brands available in its centres, and would introduce a new type of lease, including more flexible leases and rents rebased to more affordable levels.
UK retail landlords squeezed as stores hit by Covid-19 crisis
The group’s chief executive, David Atkins, said confidence was returning among visitors to its centres, but that the coronavirus crisis had “exacerbated structural shifts in retail, exerting further pressure on both property owners and brands, and provided further evidence that the UK’s historic leasing model has served its time”.
Atkins, who has been in the role for 11 years, intends to step down by spring 2021 at the latest, and the company is searching for a successor.
The company aims to raise £552m in new equity through its cash call and the sale of its 50% stake in VIA Outlets, shopping outlets found in cities including Amsterdam, Seville and Zurich. Hammerson’s two largest shareholders, APG and Lighthouse Capital, have committed to voting in favour of the rights issue and taking up their rights.
The group said the easing of lockdown restrictions had led to improving footfall and sales in its centres, as it reported its results for the first half of the year.
However, it has still collected only about 30% of the rent due in June from the retailers and companies that rent space from the group, excluding those who have switched to monthly payments.
The group’s UK net rental income for the first six months of the year was £87m, a 44% decline on the previous year, after the majority of the shops in its centres remained closed for more than three months during lockdown. Adjusted profit tumbled by 84% from £104m in June 2019 to £18m.
Hammerson is taking action to try to avoid the same fate as its rival Intu Properties, which collapsed into administration in June after the heavily indebted group failed to reach an agreement with its creditors.
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