Hammerson has ramped up property sales in a bid to reduce debt after a crisis in UK retail dealt a blow to the value of its portfolio last year and resulted in a full-year loss.
The shopping centre landlord that owns European and UK malls including London’s Brent Cross, said on Monday that it had sold £570m of properties in 2018 at an average discount to net asset value of 7 per cent. It planned to sell a further £500m to £900m in 2019 despite a “tough” market.
The company is facing intense pressure from shareholders and activist investor Elliott Advisors to prove it can increase its share price at a time of crisis for bricks-and-mortar retail.
Shares in Hammerson fell 1.2 per cent on Monday morning and are down 36 per cent compared with a 12-month high of 570p in March last year.
Hammerson pledged to overhaul its board on Monday by appointing at least two new non-executive directors and establishing an “investment and disposal committee”.
The shake-up followed Elliott’s decision to increase its stake in the landlord to more than 5 per cent in July last year, putting the company under greater pressure.
Hammerson said Elliott backed the board shake-up and had agreed not to increase its voting and economic interests in the company above 10 and 15 per cent respectively for 12 months
On Monday Hammerson said the value of its portfolio had declined 5.9 per cent in 2018 to £9.9bn. UK retail parks and shopping centres were the worst affected, with values sliding 13.2 per cent and 10.6 per cent respectively following a string of high-profile retail insolvencies and store closures.
Hammerson swung to a £266.7m loss before tax in the year to December, down from a £413.4m profit the previous year.
The company has suffered a turbulent 2018, having mounted a failed takeover bid for rival Intu and pledged to sell £1.1bn of its properties by the end of 2019, as well as all its retail parks in a bid to focus on “flagship” stores.
The company said on Monday it had sold four retail parks in 2018 but that the UK market had been “tough”.
Meanwhile, rent cuts across the sector resulted in a 1.3 per cent drop in like-for-like growth in net rental income over 2018, down from a 1.7 per cent rise at the same point last year.
Chief executive David Atkins said: “We’ve ended up with the equity market valuing our UK business at almost nothing, even though we have some of the best retail assets in the UK.”
He said the new sales in 2019 would include properties in Europe “where liquidity is better”.
Last week Hammerson’s rival Intu revealed a £1.4bn writedown on the value of its properties in its 2018 financial results. The company’s shares are trading at an unprecedented discount to net asset value of 64 per cent, compared with Hammerson’s 47 per cent, according to Peel Hunt.
Mr Atkins said: “2018 was a tough year, particularly in the UK. Tenant failures, the structural shift in retail and a more considered consumer created a difficult operating environment, putting pressure on property values.”