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Hammerson rent collections still lagging

Last month’s fundraising hasn’t altered the struggles facing the retail property landlord
October 15, 2020
  • Just two-thirds of this year’s rent has been collected
  • €301m disposal of VIA outlets has cleared
IC TIP: Sell at 17.7p

Since the pandemic hit, Hammerson (HMSO) has done a great deal to support its tenants, from striking rent adjustments to cover the periods covered by lockdown, to deferring monthly payments and even – in the case of “smaller and independent brands” – waivers.

But in the group’s first trading update since raising £552m in a rights issue last month, the retail landlord said just two-thirds of the rent due for 2020 has been collected.

Even this figure requires considerable adjustments. Of the £268m rent expected this year, just £162.6m – or 61 per cent – has been banked, with £11.4m of the £61.7m fourth-quarter rent not yet due, £8.6m has been deferred and a further £11.9m of the £85.4m yet to be paid – principally relating to second-quarter rents – has been waived.

Although just 41 per cent of fourth-quarter rents have been collected, this is above the level at the same point following the June quarter date. Hammerson also expects third- and fourth-quarter collection rates “to continue to improve, and for occupiers to pay the agreed rent for these periods”. Efforts to boost second-quarter collections – £25.6m of which is still classed as ‘outstanding’ – are still ongoing.

Shares in the group dipped 4 per cent on the update, despite confirmation that competition clearances have been given for the €301m (£274m) disposal of the group’s VIA Outlets stake to joint venture APG.

FactSet compiled consensus forecasts are for a year-end book value of 159p per share, down from 261p at December 2019.

Ahead of the rights issue, we cautioned that Hammerson remains “fundamentally challenged by the structural decline of shopping centres and the risk of further company voluntary arrangements and administrations”. Since then, a second wave of the Covid-19 pandemic has taken hold, further compounding the recovery task and hitting hopes that the Christmas shopping season might offer some income respite. Further threats to property values – the reason for our initial bearish call (52p, 14 May 2020) – remain acute. Sell at 17.7p.

Last IC View: Sell, 48p, 19 Aug 2020