Hammerson, the major player in the shopping mall industry, faced significant obstacles in 2020 due to the widespread impact of the Covid-19 pandemic. With tenants struggling to meet their rent obligations and stores forced to close for extended periods, the company’s financial performance took a severe hit. Hammerson holds a diverse portfolio of shopping centers and high-end outlets, including the highly popular Bullring mall in the UK, as well as properties in Ireland and France, such as the renowned tourist attraction Bicester Village.
In a recent announcement, Hammerson disclosed that it suffered a staggering IFRS loss of £1.7 billion in 2020, primarily attributable to a deficit in property revaluation. This loss represents a substantial increase from the previous year’s IFRS loss of £781 million. Furthermore, the company’s net rental income plummeted by 41% on a like-for-like basis, totaling a meager £158 million. This decline was primarily driven by the closures resulting from the Covid-19 pandemic, tenant restructuring, and the provision of additional funds for bad debt and tenant incentives.
Hammerson also saw a decline in the valuation of its portfolio, with the value falling to £6.388 billion at the end of the year, compared to £8.327 billion in the previous year. This decline is attributed to a reduced capital return of 35.8% for flagship properties in the UK, 15.3% for flagship properties in France, 17.5% for flagship properties in Ireland, 23.3% for retail parks, and 6.2% for outlets operated by Value Retail. The company also experienced a decrease in group occupancy, dropping from 97.2% to 94.3%, and leasing activity declined by 35% compared to 2019.
CEO Rita-Rose Gagné acknowledged the unprecedented challenges faced by the company and the retail sector as a whole. She recognized the significant impact of the pandemic and the resulting restrictions on the retail industry, as well as the increased number of retail failures. Gagné also emphasized the importance of human contact and social interaction, expressing confidence in Hammerson’s role in creating spaces for communities to thrive.
Despite the difficult circumstances, Gagné remains optimistic about the future. Hammerson’s immediate focus is to navigate through the pandemic by bolstering their balance sheet through further asset sales, strategically managing refinancing, and optimizing operations to generate maximum income. Once the pandemic subsides, the company will shift its focus to leveraging the quality of its destinations to drive future growth. Gagné highlighted that this strategy will be informed by a comprehensive strategic and organizational review, which will provide a roadmap for transformation and growth amidst ongoing economic and structural challenges.
Useful links:
– Hammerson Official Website
– Bicester Village Information
