Property developer Hammerson, which owns Birmingham’s Bullring and London’s Brent Cross, is forging ahead with new shopping centres in the UK and France.
The company sold the majority of its portfolio of London offices for £518m to Canada’s Brookfield last month to focus its attention on retail. It used some of the cash to invest a further £100 million in nine designer outlets, including Bicester Village near Oxford, through its holding in Value Retail. Hammerson also secured French department store Printemps as an anchor tenant for its commercial property shopping centre at Les Terrasses du Port in Marseille, which is due to open in the spring of 2014. Almost three-quarters of the 61,000 sq. metre shopping centre are now pre-let.
Footfall at the group’s UK shopping centres fell 2 per cent in the first half of the year and 3.3 per cent at its French shopping malls.
Hammerson’s chief executive, David Atkins, said: “That’s no real surprise against the general economic backdrop. But it’s not all bad news-leisure, footwear; jewellery and beauty have done well. The one area of real weakness was ladies’ fashion and with the sun shining [now] there is every prospect of a bounce.”
Occupancy rates have increased to 97.5 per cent. The company’s net rental profits increased by 2.4 per cent to £141.6m in the first half of the year, and the company’s book value increased 0.9 per cent to 535p a share. Hammerson was one of a small number of risers on the FTSE 100 index earlier in the week however the shares shut down 3.7p at 457.3p, with no gainers on the blue chip index at closing time.
The London Olympics could provide a small boost across the country by way of a feel good factor “depending on how well we do” although in London, people might find other things to do than visit shopping centres, or even go away to avoid the crowds. Atkins pointed to a minor dip during the Jubilee weekend when people were out to celebrate, but not necessarily hitting the shops.
Even so, Atkins is optimistic. Hammerson’s new schemes in places like Newcastle and Marseille are projected to boost income growth to 15 per cent in the next three years, a breakdown of 5 per cent a year.
Atkins said: “We will continue to grow our dividend by a similar amount.”
Hammerson has started a run of other new retail commercial property developments, such as Monumental Mall in Newcastle and Manor Walks in Cramlington, which will both open next year, and is planning a major extension of Brent Cross, adding up to 65,000 sq. metres of shops.
In Croydon, Hammerson faces a difficult battle with Australian developer Westfield, which is plotting its third major mall around London. The majority of the residents of the Whitgift centre have chosen Hammerson as their ideal development partner, but Westfield has the backing of the Whitgift Foundation, which owns the freehold. Hammerson wants to combine the Whitgift centre with its Centrale mall and will reveal its master plan for 140, 000 sq. metres of retail space in the town centre after its meeting with the council.
Hammerson has possession of 19 commercial property shopping centres (11 in the UK), including the Oracle in Reading and Cabot Circus in Bristol, as well as 18 retail parks (17 in the UK).
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