Bullring owner Hammerson to tap investors for money as revenues fall
The UK's largest shopping centre owner Hammerson will go cap in hand to investors for money as the company looks to survive the coronavirus crisis.
The owner of the Bullring centre in Birmingham today confirmed it is exploring a rights issue, which could raise as much as £600 million.
Coronavrius has taken a huge toll on Hammerson’s already stretched finances and there are real fears that the company could be heading the same way as Intu, the owner of Manchester’s Trafford Centre, which collapsed into administration in June.
Hammerson’s two largest shareholders, Dutch pension fund APG Asset Management and South African investor Lighthouse Capital, are expected to support the rights issue.
Hammerson is also in discussions with APG over the sale of a 50% stake in its European outlet business VIA Outlets. That the deal could fetch as much as £200 million. The company said the discussions were ‘advanced’ but refused to say when it would close.
In May private equity firm Orion pulled out of a deal to buy seven shopping parks for £400 million.
Hammerson said: “The company confirms that it is in advanced discussions on the terms of a possible disposal of its 50% interest in VIA Outlets to its joint venture partner APG. It is also considering a possible equity raise by way of a rights issue.”
But analysts at Liberum questioned whether the rights issue and disposal would be enough.
Analyst Tom Musson said: “Successful execution would remove a near-term covenant headache, but not solve the longer-term problem, in our view. We think raising £1.3 billion is more like the quantum needed to restore the balance sheet to a more comfortable level.”
The coronavius crisis has hit the landlord's revenues hard.
The firm has only managed to gather a little over 30% of the rent due for the third quarter of the year.
Many retailers, including Sir Philip Green’s Arcadia have asked for a “rent holiday” where they’ve withheld rents.
The Bank of England has promised that Hammerson can access loans of up to £300 million under the Covid Corporate Finance Facility (CCFF).
In June Intu, which owns the Trafford Centre in Manchester and the Metrocentre in Gateshead, fell into administration after talks with lenders failed. The business was £4.5 billion in debt.
Hammerson and Intu came close to merging in 2018.
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