Hammerson, a London-listed shopping centre landlord, intends to divest £500 mln (€567 mln) of assets during 2018, in part to support its planned €3.8 bn takeover of peer Intu Properties.
Unveiling its 2017 financial results, Hammerson said the ongoing capital recycling strategy would support the Intu acquisition.
The 2017 disposal target was £400 mln. Hammerson actually carried out sales totalling £508 mln last year. The volume comes to £416 mln after deducting the 35.5% non-controlling interest in Place des Halles, Strasbourg. Hammerson has already achieved £90 mln of disposals this year.
'Our disciplined approach to capital recycling ensures we continually lift the overall quality of our portfolio and we are seeing clear investment demand for our well-managed properties. We have achieved £1.2 bn of disposals over the last three years including £400m in 2017,' said David Atkins, CEO of Hammerson.
'In recent years we have actively rebalanced the weighting of our portfolio towards high footfall destinations in major cities across the UK and Europe and this has underpinned our strong financial success at a time of on-going structural change in retail.'
Intu
Hammerson made clear that it is pressing ahead with its announced acquisition of intu to create a £21 bn pan-European portfolio of 'high-quality retail destinations'. The remarks appear to be a response to some investors who have expressed concern Intu will water down the quality of Hammerson's portfolio.
Atkins: 'The highlight of 2017 was the announcement of our proposed acquisition of intu. In line with our strategy, the transaction will further enhance our portfolio and operating platform, providing further opportunity to expand in higher growth markets. We are on track with our acquisition timetable and integration planning.'
As Hammerson and Intu have now both published their 2017 results, the companies can now seek shareholder approval for the merger. Hammerson is holding its EGM in April. If shareholder approval is obtained, the only remaining condition will be competition regulatory approval. Assuming that approval is granted, the transaction is anticipated to complete in Q4 2018.
Leasing
Hammerson reported net rental income £370.4 mln, up 6.9% on the 2016 figure of £346.5 mln. Adjusted profit £246.3 mln, 6.% up on 2016. (+6.8%).
The company also posted the highest ever group leasing volumes, up 34% on 2016 with increases across all segments. This secured £33.3 mln of income (2016: £24.9 mln) and delivered record occupancy of 98.3% (2016: 97.5%).
Atkins: 'By creating the space that today’s retailers need to showcase their brands, we achieved the highest level of lettings this year than in any other in Hammerson’s 75-year history and group occupancy is at a 17-year high at 98.3%.' The activity contributed to a 6.5% uplift in earnings per share, which has risen on average by 8.3% per annum over the past five years.
Image: The Oracle in Reading
