Hammerson has collected less than half the rent it is owed this quarter, adding to pressure on the shopping centre owner, which has been severely hit by coronavirus.
Hammerson has struggled in the past year as the pandemic has ravaged the UK retail sector and heaped more pain on to shopping centres, which were already suffering from the loss of customers to online rivals before the pandemic.
The company, which owns a number of the UK’s most recognisable centres, including the Bullring shopping centre in Birmingham and Brent Cross in London, said on Tuesday it had received 41 per cent of the rent owed for the first three months of the year, which tenants typically pay in advance.
The landlord has agreed to defer £12.9m in payments to a later date, and has collected £19.8m of the remaining £48.6m it was due for the period.
Restrictions imposed to contain the virus have forced all but essential shops in its centres to close, and the company’s unpaid rent bill has ballooned thanks to the pandemic, with £72.5m in arrears built up since the start of 2020. Only a quarter of Hammerson’s UK tenants are permitted to open, and its French shopping centres are subject to a 6pm curfew.
“Market conditions have remained challenging since our last update in October, with national lockdowns introduced in the UK, Ireland, and France in November, and significant restrictions in place across the portfolio through December,” said the company.
Hammerson has repaid £812m of debt in recent months, using the windfall from a £552m rights issue and the sale of a 50 per cent stake in its European shopping outlets business VIA Outlets for €307m.
But Sam King, an analyst at Stifel, warned that the value of Hammerson’s portfolio of centres was likely to fall further.
As a result, said Mr King in a note, “we see limited upside to the shares in the short term, given the challenges that need to be overcome in regard to rent collection, the balance sheet and adopting a new leasing model, which will result in more risk sharing with tenants”.
The company’s largest rival in the UK, Intu, collapsed into administration in June last year, and efforts to sell off its portfolio of shopping centres have been hampered by a lack of willing buyers.
The Trafford Centre in Manchester, considered the jewel in Intu’s crown, is now owned by the Canada Pension Plan Investment Board, a key lender to Intu, after a sales process failed to attract any viable bids.
Shares in Hammerson were up about 2 per cent in early trading to 23p. Over the past 12 months shares in the company have lost 80 per cent of their value.
Hammerson is on the hunt for a new chief financial officer after James Lenton resigned last week, having been at the company for a little over a year.
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