Advertisement

Shopping centre owner Hammerson shores up finances

Bullring
Bullring

Shopping centre owner Hammerson has secured emergency support after it was battered by a plunge in retail rent payments.

The owner of the Birmingham Bullring centre and London's Brent Cross has been paid just 16pc of UK rent due on last week's third-quarter collection date, blowing a hole in its finances as stores reel from the Covid crisis.

Bosses have now negotiated new deals with the firm's lenders, drawn down £300m from an overdraft, and won approval to tap the Bank of England’s emergency coronavirus loan scheme.

The company said: "In response to pressures exacerbated by Covid-19, Hammerson is continuing to focus on reinforcing its balance sheet."

Hammerson is fighting to avoid the fate of rival Intu, which fell into administration last week after the coronavirus crisis proved the final straw on top of its £4.5bn debt pile.

Commercial landlords have been hammered by lockdown as their tenants were forced to close, with estimates suggesting as little as 20pc of rent was paid across the industry on the collection date last week.

Rival British Land today said that as of June 26 it had collected 36pc of the quarterly rent due from retail tenants, and 88pc from offices. Talks with tenants are continuing, while only 64pc of its stores in England – or 894 sites – are open.

Hammerson, which in April 2018 ditched plans to buy Intu, said it was confident rent collections would increase following negotiations with tenants.

It has now received 47pc of rent due in the UK for the second quarter, and 99pc for the first quarter, meaning overall collection for the first half of the year stand at 73pc.

The company said: "All discussions with brands regarding rent deferrals, monthly payments, and waivers have been on a case-by-case basis, taking into account the business model, risk profile and ability of the occupier to pay, alongside the support made available by the relevant governments.”

Hammerson has come under heavy attack from short-sellers betting its stock will fall in value, and is now the most shorted stock on the market with 12.6pc of its shares in the hands of hedge funds.

The business scrapped its dividend in March, while chief executive David Atkins and chairman David Tyler have both set out plans to leave the company.

Since January, shares have fallen from 300p to 80p – wiping around £1.7bn off the value of business. They dropped 0.3pc or 0.26p this morning.

Colm Lauder, real estate analyst at investment bank Goodbody, said: “Hammerson’s update reads positively.

“While we expected a weak rent performance in the third quarter, the second quarter exceeded our expectations, and management’s confidence on a further increase in rent collections is encouraging.”