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Hammerson footfall surges 60% as shoppers return but cuts rents in recovery bid

·3-min read
People wearing face masks in the Bull Ring shopping area in the City Centre on the day it was announced that Birmingham would be placed in tier three for very high alert level of the new Coronavirus tier system following the end of the second national lockdown on 26th November 2020 in Birmingham, United Kingdom. The national lockdown and following tier 3 status is a huge blow to the economy and for individual businesses in Britain's second city, who were already struggling after eight months of Covid-19 restrictions. In tier 3 people can only meet other households in outdoor public spaces like parks, where the rule of six applies. (photo by Mike Kemp/In Pictures via Getty Images)
Hammerson reported significant losses in 2020 amid the coronavirus pandemic, and is attempting to sell off some of its malls to survive the crisis. Photo: Mike Kemp/In Pictures via Getty Images

Shopping centre owner Hammerson (HMSO.L) has said that footfall in its malls was higher than in the week after the first lockdown ended in June last year as UK shoppers returned to stores. 

Non-essential shops, outdoor areas in pubs and restaurants, hairdressers and gyms were among a host of businesses that reopened on 12 April after being shuttered for three months. 

Managing director, Mark Bourgeois told BBC's Today Programme that Brits felt safer to shop due to Britain's successful vaccine rollout, adding "there's more cash in people's pockets and they feel perhaps more confident to spend."

Despite the encouraging figures, Bourgeois added that the FTSE 250 (^FTMC) company was "resetting" rents for UK tenants, slashing them by 30%.  

"We're doing our bit, as are many landlords, to make sure we maintain our communities and maintain vibrancy in these centres."

The UK boss said that Hammerson is also looking to "repurpose" space left by disappearing brands. This includes turning a Debenhams store in Leicester into 300 homes

"It's tough but certainly in the right locations and in these big experiential destinations the brands want to be there and we're encouraged by the conversations we're having."

Shares in the company rose nearly 2% on Friday afternoon in London.

Chart: Yahoo Finance
Chart: Yahoo Finance

Hammerson reported significant losses in 2020 amid the coronavirus pandemic, and is attempting to sell off some of its malls to survive the crisis.

Earlier this week the owner of the Bullring shopping centre in Birmingham and Brent Cross in London confirmed earlier this week that it is in talks over a possible disposal of some of its retail parks portfolio to Canadian private equity firm Brookfield.

Hammerson said that it "continues to make asset disposals in liquid markets to further strengthen the balance sheet, with gross proceeds of £73m ($101m) achieved to date in 2021.

"There can be no certainty that a transaction will take place or the terms on which any transaction may occur. The Company will provide a further update in due course, if appropriate."

The company said losses widened from £781m in 2019 to £1.7bn after the COVID-19 pandemic wiped £2bn off the value of its property portfolio.

The loss — the largest in its history — hit the value of its shopping centres in the UK, France and Ireland. 

The portfolio value at the end of 2020 was £6.3bn, down from £8.3bn the year prior. This was driven by a 35.8% decline in its UK flagship retail destinations.

Hammerson's net rental income for the year dropped 41% halving to £158m. All but essential businesses in the firm’s centres have been forced to shut for the majority of last year, with many shops having withheld or deferred rental payments.

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