Hammerson has sold off the last of its retail parks as it seeks to rein in debt and make it through the Covid-19 crisis.
The shopping centre owner has disposed of a portfolio of seven retail parks to Brookfield, the Canadian investment giant, for £330m, an 8 per cent discount to last December’s book value, it announced on Wednesday.
“Our immediate priority is to strengthen the balance sheet,” said Rita-Rose Gagné, Hammerson’s recently appointed chief executive. The company posted a £1.7bn loss last year, its largest ever, as the sector was thrown into turmoil by coronavirus.
The sale to Brookfield will ease Hammerson’s debt burden, which was £2.2bn at the end of 2020, and forms part of a broader turnround strategy under the new chief.
“We’re in the mindset of trying to simplify and refocus the portfolio,” said Gagné last month, announcing the company’s annual results. Hammerson will aim to sell off assets in pockets of the market where there is liquidity — such as retail parks, a relatively strong performer during the pandemic — and to repurpose old retail buildings if possible, she added.
The group has refreshed its board over the past 18 months and on Tuesday announced the appointment of a new chief financial officer, Himanshu Raja.
But successfully repositioning the business will be a challenge, with few willing buyers for the kind of large shopping centres with which Hammerson is synonymous, such as the Bullring in Birmingham and Brent Cross in London.
“This was the easy one: the easy portfolio to sell in the current market,” said Miranda Cockburn, real estate analyst at Panmure Gordon.
Through the Brookfield deal and a handful of smaller retail park sales in recent months, Hammerson has “reduced its leverage by around £400m. That’s great but they still need to sell more and the toughest bit is yet to come,” she added.
Hammerson revealed on Tuesday that it had collected just 40 per cent of the £45m rent it is owed for the three-month period between March and June, which is typically paid in advance. The company has waived £39.2m in rent since the start of the pandemic and a further £74.5m is outstanding as a result of tenants withholding payment.
Shares in the company are trading at 37p, roughly a third of their pre-pandemic level.