Since joining Hammerson as chief executive in November 2020, Rita-Rose Gagné has had to put the business on a pretty tough workout regime. She’s had to slim down the business significantly, selling some £950m of assets and shrinking its headcount by some 68% as part of a robust cost-cutting initiative.
But new full-year results from the REIT show the workout is starting to pay off. Since 2020, costs have been reduced by almost one-quarter and there’s 10% more to come, most of which should be achieved through an improved technology platform allowing the business to be more efficient.
Hammerson has become “leaner and developed muscle”, says Gagné. And now it is ready to start flexing that muscle a little bit.
“It’s not just about getting smaller,” says Gagné. “It’s having muscle to grow and to grow better.”
And after three years of being laser-focused on “getting rid of the fat”, Gagné now says she has a rebased portfolio and will be just as focused on optimising the assets and land Hammerson has and maybe even expanding.
A new focus
“We have a lot of opportunity in the portfolio,” she says. “And that’s a great thing to have these days as a lot of companies just have an operating portfolio, where there’s not that much to do to create value. We have a lot of catalysts to drive further value. And I’m very focused on that now.
“As focused as I was to turn around the company and bring it to where it is, I’m just as focused now to get the maximum potential out of this great portfolio. We’re now on the front foot, and that’s exciting.”
She adds: “Obviously it remains a challenge, and we’re eyes wide open on the overall volatility in the market, but I’m quite happy that we’ve put ourselves in a very resilient position to weather that volatility.”
That resilient position includes reducing the group’s losses by almost 70% year-on-year and boosting earnings by £116m – an 11% growth over 2022. The growth has come from a solid leasing environment, with 306 deals agreed delivering £46m of headline rent, footfall up by 3%, dwell time up by 5% and like-for-like sales up by 1% in the UK and 3% in France. Not massive moves forward, but enough to make a difference. Enough to be that one more rep in Hammerson’s new workout regime.
Gagné credits Hammerson’s new-found fitness with its focus on core destinations. The group now has a rebased portfolio with 10 city centre estates and 80 acres of land that it can sweat, beef up and potentially add to as it gets fitter.
It’s all about the core
“The results are on the shoulders of some key core destinations,” says Gagné. “The estates we have are estates that are growing, that can grow, that have the potential and that are in growing cities. You can now see the performance. And they’ve been progressing over the last year in very challenging conditions.”
She adds: “We now want to reinvest in that portfolio and continue to repurpose space, deliver the best space adapted to the new demand and also the best amenities for people who live in city centres or who come to visit. That’s the goal here.
“We’re very much more focused on that. We have a lot of opportunities in the portfolio to grow, to grow income, but also to grow the assets and, eventually, additional opportunities around our assets.”
There’s a certain swagger to Gagné off the back of Hammerson’s latest results. While she says she’s “eyes wide open” to the challenges of the environment, she’s also confident, “very, very confident” in her own words, of the opportunity the portfolio provides.
That opportunity, says Gagné, comes from the quality and location of its destinations. The best assets in the very best prime city centre catchments and transformation hubs and those unrealised chunks of land such as Bishopsgate Goodsyard in the heart of the City, which offer long-term opportunities.
A new look
Gagné’s vision for Hammerson’s rebalanced portfolio is to transform it into “vibrant, 24/7 multi-use estates”.
“These destinations are fast growing and are part of the fabric and infrastructure of the cities in which we operate,” she says, pointing to the Bullring in Birmingham as an example. The REIT has refreshed the occupier base in the mall, handing over the former Debenhams space to M&S, adding more leisure – including Lane 7 Bowling and VR Sandbox, plus securing football-themed entertainment operator Toca Social’s debut in the city. The store will be its first outside London when it opens later this year.
Hammerson has also held its first night-time events at the Bullring, a move that Gagné struggles to hide her excitement over.
“What excites me about the portfolio is this notion of buzzing 24/7 city centre assets that are basically living spaces,” she enthuses. “It’s about assets that have a purpose in their community. There are all sorts of things going on. There’s art, culture, education, sports, leisure, entertainment, great shopping, a great experience. Those opportunities of placemaking excite me.”
During 2023, the business had to be disciplined with its resourcing and capital expenditure on development projects, pre-development and strategic land, says Gagné, instead focusing on initiatives that provided short-term routes to value, and projects that added the most value to its estate. But with a renewed focus on growth, the group is looking forward. Initial planning consents are expected to be finalised this year for Dublin Central, a 5.5-acre site with plans to create a mixed-use development providing 440,000 sq ft of flexible workspace, 80,000 sq ft of shops and restaurants, 94 new homes and up to 210 hotel bedrooms. Over at Dundrum, in the suburbs of Dublin, Hammerson’s planning application for a strategic residential masterplan remains in consideration with the local authority.
And at Martineau Galleries, part of the REIT’s wider Birmingham Estate, the group has been working closely with Birmingham City Council and other stakeholders to ensure it has a “route” to prepare for the development of the property.
Strong platform
“Over time, we have a unique opportunity to complement our core with a broader mix of uses by repurposing existing space, consolidating and unlocking value on adjacent land,” says Gagné. “We have a strong platform with long-term visibility of income. We are confident in our ability to grow top line and earnings off a new base.”
“When you look at the past three years, frankly, 2024 looks positive,” she adds. “I’m positive because of what we have and because of where we are and the fact we’re able to navigate that short-term volatility. I have my eyes wide open, but I’m not negative. The assets have shown that they really have a purpose and that’s not going away, whatever the environment is. And I think they’ve proven that, and the team has proven that we’re able to tackle that. So I look at 2024 and the years to come quite positively because of the inflection point we’re at. The environment is just normalising and we just have to make sure we’re agile and nimble to tackle and navigate it.”
Agile, nimble and ready to show off those “developed muscles”, perhaps.
Image © Louise Haywood-Schiefer
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