The shopping centre landlord has created a new investment and disposal committee to oversee a £900m disposal programme, alongside “constructive dialogue” with key stakeholder Elliott Advisors.
The committee, which will also “ensure orderly succession planning”, will be chaired by incoming Jupiter Fund Management chief executive Andrew Formica, who is also a non-executive director.
Formica will lead the committee of four, which is rounded off by Pierre Bouchut and two other non-executive directors who have yet to be appointed.
These measures have received support from activist shareholder Elliott Advisors, which Hammerson confirmed it had “entered into a relationship agreement with”.
This agreement comprised other voting and governance terms, including a commitment that Elliott will vote in favour of the ordinary course resolutions recommended by the board at the forthcoming AGM.
Elliott has also agreed not to increase its voting interests and economic interests in the company above 10% and 15% respectively. This agreement will remain in force for a maximum of 12 months, subject to certain conditions.
Elliott said: “Following constructive dialogue with Hammerson’s board, Elliott welcomes both the board’s decision to search for two additional independent non-executive directors, and the formation of a new investment and disposals committee, with oversight and responsibility for the company’s ongoing disposals programme.
“Elliott looks forward to continuing to engage with the board of Hammerson to deliver on this strategy.”
Disposals programme
Hammerson said it is in active discussions on disposing of stakes in its assets in deals worth more than £900m, in “multiple sectors and territories”.
This included a “limited number of retail parks, which we remain committed to exiting over the medium term”.
The REIT said it made £570m of disposals, at an average disposal price of 7% below December 2017 book value.
2018 performance
The value of Hammerson’s portfolio dropped by 6.6% to £9.9bn, during the year to 31 December.
EPRA net asset value per share dropped by 4.9% to £7.38. Headline LTV stood at 38%, increasing from 36% in the previous year.
LTV on a “fully proportionally consolidated” basis, including net debt and property values associated with its outlets business, was 43%, up on 40% in 2017.
Gearing was 63% during 2018. Net rental income fell by 6.2% year-on-year to £347.5m.
David Atkins, chief executive of Hammerson, 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.
“We believe that a successful deleveraging programme will best position Hammerson for the current environment and beyond. Disposals will also enable us to prove the inherent value of this business – which we believe is not recognised in the current equity market.
“Over the longer term, we will generate opportunities to create additional value through City Quarters, which will see us transform many of our city venues beyond pure retail into successful, thriving neighbourhoods.
“The job of creating flagship spaces is never done, but through expert management, innovation and investment we are confident in the future of Hammerson and in maximising value creation for shareholders.”
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