A structural shift in consumer spending habits to online shopping has prompted retail landlord Hammerson (HMSO) to rethink its investment strategy. The emphasis now is on reducing debt and streamlining its property portfolio.
Disposals of £570m were made in the year to December 2018 at an average price of 7 per cent below December 2017 book value. And a further £500m of disposals are planned for 2019, although active discussions are under way that could see as much as £900m in sites offloaded.
Net rental income fell from £370m to £348m because of the disposals, while like-for-like rental income growth slowed to just 0.3 per cent following tenant failures and company voluntary arrangements. Headline profits were wiped out by revaluation losses of £449m and net losses on disposals of £65m. Furthermore, revaluation gains on the premium outlets portfolio were trimmed down from £225m in 2017 to just £56m. This resulted in a 4.9 per cent drop in adjusted net asset value to 738p per share.
Overall occupancy of 97.2 per cent remained above the 72 per cent target, but was down from the previous year, impacted not only by tenant failures but also because two completed retail developments have not been fully let.
Analysts at Peel Hunt are forecasting adjusted net asset value at the December 2019 year end of 690p per share.
| HAMMERSON (HMSO) | ||||
| ORD PRICE: | 362.3p | MARKET VALUE: | £ 2.78bn | |
| TOUCH: | 362.1-362.4p | 12-MONTH HIGH: | 578p | LOW: 314p |
| DIVIDEND YIELD: | 7.1% | DEVELOPMENT PROPERTIES: | £390m | |
| DISCOUNT TO NAV: | 49% | |||
| INVESTMENT PROP: | £8.3bn | NET DEBT: | 63% | |
| Year to 31 Dec | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 634 | 703 | 95.7 | 20.4 |
| 2015 | 703 | 732 | 92.8 | 22.3 |
| 2016 | 728 | 323 | 40.2 | 24.0 |
| 2017 | 758 | 413 | 49.0 | 25.5 |
| 2018 | 709 | -267 | -34.1 | 25.9 |
| % change | -6 | - | - | +2 |
| Ex-div: | 21 Mar | |||
| Payment: | 02 May |
