Hammerson chief executive David Atkins has defended the firm’s proposed £3.4bn acquisition of intu in the FTSE 100 retail landlord’s full-year results.
“We are on track with our acquisition timetable and integration planning,” he said in a statement to accompany its year end results to 31 December.
The share price of the owner of the Birmingham’s Bullring shopping centre (above) fell by more than 6% to close at 501.5p when the deal was announced in December and have now dropped to 477.2p.
However, Atkins has defended the merger, which would create the UK’s largest listed property company, with a stake in 12 of the UK’s 20 largest shopping centres.
“Not all retail is equal and not all locations are well placed to support the future needs of brands,” he said.
“But with 440m visitors a year, our unrivalled consumer insight and relationship with retailers ensures that we target the next generation of brands, as we proactively rotate retailers and expand winning formats.
“In this evolving retail marketplace, winning retailers increasingly choose our exceptional destinations to achieve their growth potential and so, our role as an expert operator of retail property is more significant than ever before.”
Hammerson boosted its rental income by 6.9% to £370.4m, giving an adjusted profit rise of 6.8% to £246.3m. The value of its portfolio was up 5.9% to £10.6bn.
The retail investor reported £1.2bn of disposals over the last three years including £400m in 2017.
Atkins said: “Consumer confidence in France and Ireland is strong and our unique position in the premium outlets sector continues to deliver impressive growth, and today we announce further investment by increasing our economic interest in the internationally renowned Bicester Village to more than 50%.
“Overall, we are in a strong position to respond to the current consumer conditions in the UK and our rigorous approach to the capital and asset management of our properties supports our confidence in generating future returns for our shareholders.”
Hammerson announced today it has taken control of more than 50% of Bicester Village, the out-of-town designer discount centre, which it jointly owns with Value Retail.
The retailer investor and developer has increased its investment in Value Retail through the acquisition of a number of direct investor interests in Villages. This included Bicester Village and La Vallée Village, Paris, for a total cost of £76m.
Responding to the results Alan Carter, managing director of Stifel Nicolaus Europe, said: “The UK is getting tougher for retailers, and increasingly for retail landlords with increased operating costs leading to UK shopping centre sales declining by nearly 3%.”
“Problems with an increasing number of high-profile retail chains must impact rental values.
“Next has already reported that it pays 25% less on average than previous when it renews a lease and HMSO refers to ‘some leasing discussions taking longer to conclude’, implying more resistance from retailers which is hardly a surprise.
“It is difficult to envisage this situation doing anything other than worsen from the landlords’ viewpoint.”
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