Hammerson in talks on asset disposals
Embattled mall owner looks to raise funds to survive the pandemic lockdown
JSE-listed Hammerson, which owns retail shopping centres in the UK and Europe, is considering asset disposals and a rights issue.
The London-based company, which has lost three quarters of its share value so far in 2020, is in discussions on a possible disposal of its 50% interest in VIA Outlets to its joint venture partner APG. VIA operates in nine European countries, providing space to 1,140 stores.
Hammerson and other UK-focused landlords have been under pressure after Britain voted to leave the EU in 2016. It has dented business confidence and the perceived values of commercial property in the UK, with Covid-19 dealing it another blow in 2020.
South Africans who have invested in Hammerson and peer UK mall owners such as Intu Properties and Capital & Regional have seen their value wither in 2020, as the pandemic stopped many stores from trading while countries locked down their economies for a number of months.
Intu, which owns close to 20 malls in the UK and also has exposure to Spain saw its fortunes unravel as it could no longer manage its debt interest payments on its borrowings of R100bn. It entered administration at the end of June. Its CEO, Matthew Roberts, resigned.
But Hammerson's management said on Monday that while it was looking to raise funds, it was not risking administration.
At end-December the total portfolio was valued at £1.4bn (R30.8bn), of which Hammerson’s share was £693m.
Last month Hammerson secured a new agreement with lenders that gives it another 18 months to pay its interest payments.
The company’s share price closed 4.60% lower at R13.48 on Monday, down 75% year to date. It has a market capitalisation of R10.3bn.
Catalyst portfolio manager Mvula Seroto said recently that the UK retail sector was already facing structural headwinds before the Covid-19 crisis due to valuation writedowns and an acceleration of online sales compared with brick-and-mortar sales.
Hammerson is not the only JSE-listed stock to hit the wall in 2020. Other worse performing property companies this year include Intu, British secondary mall owner Capital & Regional and SA’s second-largest property group by assets, Redefine.
The value of listed property companies declined to R315bn, as measured by the all property index (Alpi), which includes all of the listed property stocks on the JSE, from about R600bn a year ago.
Commercial real estate has been battered by many challenges over the past months. As unemployment and business closures soar in SA, making it harder for landlords to collect rent and grow dividends, value is being destroyed.
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