Hammerson planning Bullring expansion to enhance retail offering
RETAIL property group Hammerson is looking at extending Birmingham’s Bullring shopping centre to ensure it continues to thrive. Options include a possible cinema and more catering outlets.
In May, the company increased its stake in the centre in a deal worth more than £300m. In a 50:50 Joint Venture with Canada Pension Plan Investment Board, Hammerson acquired Future Fund’s 33.3% stake for £307m.
In its interim results statement published today, Hammerson said: “This acquisition underlines our commitment to prime retail destinations and generating income growth through investment in winning sectors of the retail property market. Bullring is one of Europe’s leading shopping centres, attracting 40 million visitors per annum, and is 99% occupied.
“Bullring has been a consistently strong performer since we opened it in 2003, demonstrating compound annual rental growth of 5.5%.
“We have several options to further extend and redevelop the centre, to ensure that it continues to outperform over the coming years.”
The pledge is thought to be a response to Birmingham’s retail sector, which is in a constant state of flux.
The new multi-million pound John Lewis department store is currently taking shape as the anchor for the redeveloped New Street Station Gateway scheme, while London property investor Brockton Capital and its partner Milligan Retail are planning a major revamp of the Mailbox to improve its position as a shopping destination.
Hammerson said that following the successful Spiceal Street restaurant extension in 2011, there were now a number of asset management and development opportunities to assist future growth at the centre including the introduction of a cinema and additional catering.
Passing rents for Bullring as a whole are £53m per annum and after taking into account purchase costs the net initial yield on the purchase was 5.7%.
Hammerson said it would continue to have responsibility for asset management and development of the centre.
The interim results show that for the six months ended June 30, 2013, the group’s total pre-tax profit was £95.8m (2012: £48.8m), while net income from its properties reached £140.4m, (2012: £127.8m), an increase of almost 10%.
David Atkins, Chief Executive of Hammerson, said: “While household budgets remain under pressure, there are encouraging signs of improvement in macro-economic conditions in the UK.
“Our winning venues remain in demand from consumers and retailers. This combined with our management actions allows us to maintain high occupancy, secure new tenants on attractive terms and consistently grow rental income. We therefore have confidence in our continued ability to secure strong growth in earnings and dividends over the medium term.”
