Hammerson in the crosshairs
The UK and Europe mall owner is being eyed by suitors according to analysts
Hammerson, which owns malls in Western Europe and the UK, could be a potential takeover target after Brexit uncertainty and the Covid-19 pandemic battered its share price, according to two analysts.
Once the largest property company on the JSE when it listed in 2016, Hammerson said on Wednesday its CEO David Atkins resigned after 11 years in the role and 22 years at the company. He will step down by 2021 at the latest. “The board is conducting a search for David Atkins’ successor, and it will consider both internal and external candidates,” Hammerson said.
Hammerson’s flagship assets include Brent Cross in London, the UK’s first large enclosed shopping centre, and the Bullring in Birmingham.
Stanlib's head of listed property, Keillen Ndlovu, said there had been devaluation in some of the group’s shopping centres.
“There’s speculation that there could be major corporate action coming up at Hammerson. There are a number of reasons leading to this, including a heavily discounted share price, sizeable shareholder register changes lately as well as upcoming management changes,” he said.
Hammerson has been through a torrid time in recent years.
Uncertainty about Brexit after the June 23 2016 referendum, in which the UK voted to leave the EU, has put pressure on the stock.
In the year to December 2019, the value of the fund’s flagship assets fell 14.8%. However, the value of its premium outlets rose 8.2%. The overall value of its portfolio fell 9.8% from £9.938bn (R214bn) to £8.327bn (R178.9bn) over that period.
The lockdown in response to the pandemic has made things worse for Hammerson as many of its malls have been unable to operate except for essential businesses such as food stores and pharmacies.
Since 2019, it has tried to sell secondary assets to shore up cash and reduce its debt.
Earlier this month, it tried to sell seven retail parks to private-equity firm Orion for £400m (R7.7bn), but the deal collapsed when Orion pulled out.
The group was looking to acquire the assets at a hefty discount of 22% below last June’s book value, after the Covid-19 pandemic has caused a seismic shift in British retail.
When Hammerson listed at R112.11 per share on September 1 2016 it had a market capitalisation of R91.6bn.
Its share price has fallen 73.25% year to date. On Thursday, the price closed 4.18% up at R15.95, giving the group a market capitalisation of R11.7bn.
Garreth Elston, CIO at Reitway Global, said Hammerson and other property stocks with high-quality assets could be seen as takeover targets in 2020.
“Almost every retail real-estate company seems like a great takeover target. But its like the dog who catches the car, what do you do with it?.”
He said Hammerson “has a good portfolio, but faces severe headwinds; the CEO leaving opens the door for new blood which could revitalise the company, and hopefully avoid the mistakes Hammerson’s leadership made in the past such as the rebuffing of Klépierre’s proposal in 2018”.
Elston said if Hammerson could receive a takeover offer it could be the exit many shareholders “have hoped for”.
“It likely won’t be the rich premia that Simon and Growthpoint paid for their recent deals, but a realistic premium to current values would likely be favourably received by shareholders,” he said.
Last week, JSE-listed and Europe-invested Lighthouse Capital, led by South African Stephen Delport, announced it had acquired a 10.31% stake in Hammerson. Lighthouse has not been reachable for comment.
Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.
Please read our Comment Policy before commenting.