The shopping centre operator Hammerson has published its 2018 first quarter results, and they show that recent restructuring by a number of UK retailers has had a ‘very limited’ impact on the company’s profits, due to high occupancy and continued high demand for the group’s destination centres. The results are testament to the UK retail sector’s current resilience, despite some challenging macroeconomic conditions.
The Hammerson report reads:
“With high occupancy and continued good demand for our destination centres, the impact of these retailers on the group’s profitability is very limited.”
The company reported 1.8 percent growth in the net asset value of each share, and its total portfolio was valued at £10.58 billion, an increase from £10.56 billion at the end of the December. Hammerson has signed £6.8 million worth of leases in Q1 2018, a 58 percent year-on-year increase.
Chief executive David Atkins commented:
“Whilst we recognise the difficult trading environment and challenges felt by many retail and restaurant formats in the UK, there continues to be good demand for space across our centres.”
“The Easter trading weekend again demonstrated that not all retail is equal to our centres delivering positive footfall growth of five percent compared to average reported Easter footfall across all shops of -2.4 percent.”
Hammerson is the owner of some of the UK’s most popular shopping centres, such as the Bullring in Birmingham, Victoria Gate in Leeds, and Brent Cross in London.
“Our strategy and the positioning of our portfolio continue to deliver a strong operational performance. Our attractive high-growth markets of premium outlets and Ireland are driving valuation growth and we are on track with our disposal programme.”
He expected the company to enjoy “continued income growth”, growth that would “drive future shareholder returns.”
Hammerson has also been at the centre of a potential takeover of UK rival Intu, a deal that would lead to the formation of the largest shopping centre company in the UK. If finalised the takeover would see Hammerson shareholders own 55 percent of the combined company.
But the Intu takeover has been temporarily put on hold after French company Kleipierre made a £4.9 billion offer to buy Hammerson in March. The offer was rejected, and Hammerson’s Q1 update addressed the situation regarding Kleipierre, saying that it did not intend to finalise any takeover of Intu while it was still awaiting further clarity from Klépierre over their proposed takeover.