Hammerson has reported good leasing activity in the third quarter amid “ongoing signs of recovery” in the UK retail market, according to chief executive David Atkins.
The REIT said it signed 94 new leases across the portfolio in the year to 10 November, representing £9.1m pa, in line with estimated rental value and 13% ahead of previous passing rents with the UK market delivering slightly stronger rents than France.
Despite increased letting activity – some 82% higher than this time last year – occupancy across the developer’s retail portfolio has fallen 30 basis points to 97.1%, which the company said was mainly because of the reconfiguration of space.
Tenants’ sales in Hammerson’s UK shopping centres, which include Brent Cross in London and a stake Birmingham’s Bullring, were flat in the third quarter and footfall was down 2.1% against the same period in the prior year.
In France, tenants’ sales were down 4%, largely as a consequence of the continued disruption from refurbishment works, particularly at O’Parinor and Italie Deux, while footfall across the French portfolio was also down 2.8% for the quarter.
Although the firm did not provide a valuations update in its IMS, it said that the portfolio “continues to perform well and remains in demand in the investment markets, providing good support for valuations”.
It also added that it is seeing “ongoing signs of recovery in our markets, particularly the UK, where improving retailer confidence is generating increased demand for our retail space”.
A brief financial overview set out company borrowings of £2.3bn at 30 September and a cash balance of £71m, to give net debt of £2.2bn, in line with Q2.
The loan-to-value and gearing ratios at 30 September 2013 were 38% and 57% respectively. Cash and committed unutilised bank facilities totalled £660m.
Updating development progress, Hammerson said works were progressing on schedule at the 120,000 sq ft leisure extension at Silverburn, Glasgow, with the first phase due for completion in autumn 2014.
In Leeds, it said construction work would begin in spring 2014 on its consented Victoria Gate development, with completion by the end of 2016.
In the capital, Hammerson anticipates securing a planning resolution before the end of the year for its joint venture with Westfield to redevelop the Whitgift Centre in Croydon, and it has submitted a revised planning application for the regeneration of Brent Cross in Cricklewood.
In France, the REIT said its 660,000 sq ft Marseille shopping centre Les Terrasses du Port is now 90% let and its refurbishment and extension of O’Parinor in Paris is on track to complete in spring next year.
Atkins said, “We are seeing ongoing signs of recovery in our markets, particularly the UK, where improving retailer confidence is generating increased demand for our retail space. We are capturing this momentum by advancing developments, refreshing our assets and pushing ahead with multichannel initiatives to enhance the shopper experience at our centres. We are well positioned to capitalise on opportunities in our markets.”
bridget.o’connell@estatesgazette.com
