UK REIT Hammerson's net rental income (NRI) rose 10% in the first half of the year following a 44% increase in leasing volumes.
Adjusted profit rose 6% to £119 mln (€133 mln) on NRI of £184 mln, the London-listed company reported on Wednesday.
‘This performance is particularly pleasing in the context of a more uncertain political and economic backdrop and structural shifts in the retail sector,’ CEO David Atkins said. ‘In an environment of continuing retail polarisation, brands are prioritising our well invested, prime locations to support a multichannel platform. This demonstrates the relevance of our portfolio and the success of our strategy focused on prime retail destinations in growing consumer markets, ensuring that we remain one of the winners of retail evolution.’
Atkins said the company’s two new destinations, Victoria Gate, Leeds and Westquay South, Southampton, (pictured) which opened in late 2016, have performed well in the first half of 2017.
The value of the portfolio grew 6%, thanks partly to capital gains, acquisitions as well as currency effects, with the outlet unit providing a particularly strong contribution. The group’s premium outlet and Ireland portfolios produced total returns of 8.1% and 4.5% respectively due predominantly to income growth.
Earlier this month Hammerson made a further commitment to VIA Outlets with the acquisition of Norwegian Outlet Oslo and the completion of its Batavia Stad Fashion Outlet extension near Amsterdam. In terms of disposals, the company is forecasting total sales of £400 mln this year. VIA is an outlets joint venture formed in 2014 in partnership with APG, Value Retail and Meyer Bergman in which Hammerson has a 47% stake.
Hammerson also has exposure to the premium outlets sector through its stake in Value Retail. At 30 June 2017, the UK REIT had interests in 19 outlet centres in 13 different European countries providing over 420,000 m2 of luxury and aspirational retail space. The sector continues to generate strong sales growth and investor demand, with premium outlets particularly benefiting from international tourism trends, the company said in a press release.
Atkins conceded that the consumer backdrop in the UK was ‘softening’ and that retailers are seeing increased headwinds, but said he was confident that the company would continue to grow income and dividends in line with previous guidance. In the first six months Hammerson posted a 4% decline in retail sales at its UK shopping centres and a 3% fall at its French malls.
