Hammerson to raise £825m through rights issue, disposal

Shopping centre owner Hammerson said on Thursday that it plans to raise around £825m through a rights issue and the sale of its 50% interest in Via Outlets to help counter the impact of the coronavirus pandemic.

The company will raise £552m through a rights issue and £274m through the sale of Via Outlets to joint venture partner APG .

Hammerson said the transactions will "significantly strengthen" its financial position, reducing absolute indebtedness and providing liquidity headroom and financial flexibility as it looks to refocus its portfolio towards flagship destinations in the UK and Ireland.

The group also said it was introducing a new leasing model in the UK based on experiences with brands, its existing lease structures in Continental Europe and the more collaborative approach of premium outlets.

"This new approach will include more flexible leases, rebased rents at more affordable levels, indexation replacing the existing rent review system and an omnichannel top-up element," it said, adding that it will provide a sustainable, growing income stream, which in turn will stabilise capital values.

Chief executive David Atkins said: "Today we have announced a series of transactions to recapitalise the business and reduce leverage by a quarter. This will help us to deal with these unprecedented conditions while enabling us to reposition Hammerson further.

"Looking forward, we will continue to dispose of assets and recycle capital from across the portfolio as we create a business focused on flagship destinations and mixed-use City Quarters over the medium term."

News of the rights issue and disposal came alongside the company’s first-half results, which showed that net rental income fell 44% to £87.3m, with adjusted profit down 84% to £17.7m as it took a hit from Covid-19 lockdowns.

Atkins said: "The extraordinary disruption caused by Covid-19 on the retail property sector, the economy and society as a whole is reflected in these half year results, however, in recent weeks we have seen an encouraging increase in footfall as confidence begins to return amongst visitors to our flagship destinations."

At 0945 BST, the shares were down 1.9% at 54.89p.

Broker Liberum said: "The two largest shareholders are supportive of the issuance. But we still question broader investor’s appetite for the shares in the current market, and think £1.3bn is more like the capital needed to restore the balance sheet to a more comfortable level (i.e. 35% LTV by the year-end, accounting for our forecast H2 value declines)."