Bullring owner Hammerson swings to loss amid pledges to carve up portfolio
Shopping centre operator Hammerson, owner of the Bullring and Grand Central in Birmingham, has swung to a loss after a year of retail failures put pressure on property values.
The firm's full-year results showed a loss before tax of £266.7 million, compared with a profit of £413 million in 2017.
Net rental income declined 6.2 per cent to £347.5 million.
Chief executive David Atkins said: "2018 was a tough year, particularly in the UK. Tenant failures, the structural shift in retail and a more considered consumer created a difficult operating environment, putting pressure on property values."
Major retailers such as Maplin and House of Fraser went into administration last year, while many others used a form of insolvency known as a company voluntary arrangement (CVA) to shut stores.
Hammerson, which also owns Telford Forge shopping park, said net rental income had dropped by 1.3 per cent at its UK flagship destinations and by 4.3 per cent at retail parks due to tenant failures and CVAs.
The value of the company's portfolio dropped 5.9 per cent to £9.94 billion.
Hammerson said its properties have fallen in value by an average of four per cent during 2018, including a reduction in UK values of 11 per cent.
The firm expects further weakness in the UK until the outcome of Brexit is determined.
The group also sold off £570 million worth of its assets in 2018, with plans to dispose of a similar amount in the current year.
Hammerson said it would target another £500 million worth of disposals in 2019 and has set up an Investment and Disposal Committee as it ramps up its focus on slimming down the portfolio.
The group is in talks over possible transactions with a total value of up to £900 million.
The move was welcomed by activist investor Elliott, which upped its stake in the company to more than five per cent in July. The hedge fund has been pushing for a major reshaping of the portfolio.
Elliott said in a statement: "This increased focus on strategic disposals, as marked by updated targets for 2019 and a current pipeline of potential sales of over £900 million, signals a positive development in the company's progress, and its ability to ensure that its portfolio of high-quality assets delivers compelling value for all shareholders."
Three shopping centres reported increased footfall, with the strongest growth achieved at Grand Central.
Hammerson said it continues to improve the catering line-up at Grand Central with the opening of Comptoir Libanais, Holy Moly Macaroni and Tasty Plaice.
At the Bullring, Morphe, the US beauty retailer, opened its second UK store and Hugo Boss opened its first HUGO standalone store outside London. Other key brand lettings included Arket, Barbour, Calvin Klein, Kurt Geiger, NYX Professional Make Up and Tommy Hilfiger.
