Bullring rental decline fails to derail Hammerson

Birmingham’s flagship Bullring shopping centre failed to show any growth in rental income during 2017, owner Hammerson has revealed.

In its full year results, Hammerson said like-for-like net rental income at its high-quality UK Shopping Centres division had increased by 1.8% across its portfolio, with the exception of three sites, of which the Bullring was the most prominent.

“All UK centres generated growth with the exception of Bullring, Cabot Circus (Bristol) and Union Square (Aberdeen), for which 2016 income was boosted principally by turnover rent, surrender premiums and backdated rent reviews respectively,” it said.

Gross rental income from the centre, in which Hammerson is a 50:50 joint owner with the Canadian Pension Plan, was £59.4m but operating profit was £77.2m – of which Hammerson’s share was £38.6m. Grand Central, in which Hammerson is also a 50:50 partner with CPPIB, saw a loss of £2.9m – Hammerson bearing £1.4m of this.

Hammerson’s share of the net assets at the Bullring is more than £618m.

Elsewhere, it said its reconfiguration of a former department store at Highcross in Leicester had helped create more than 10,000m2 of upgraded space over three floors. International fashion brand Zara will anchor the refurbished space and JD Sports will upsize its unit. The project will also accommodate a new leisure offer, Treetop Adventure Golf.

Rising inflation and lack of consumer confidence over Brexit have been earmarked as challenges for which the company will have to try and overcome.

Overall, net income rose 6.9% to £370.4m (2016: £346.5m), with IFRS profit up 22.4% at £388.4m (2016: £317.3m). Basic earnings per share rose 21.9% to 49p (2016: 40.2p) and the final dividend was up 6.5% at 14.8p (2016:13.9p).

By year end, the portfolio was value at £10,560m (2016: 9,971m), an increase of almost 6%.

The group’s IFRS profit for the year, attributable to equity shareholders, was £71.1m higher than the prior year. This was principally due to higher revaluation gains on the group’s premium outlets portfolio which generated a net revaluation gain of £225.2m in 2017 compared with £138.4m in 2016.

The group also said that its proposed acquisition of the intu group, which owns centres in Merry Hill, Stoke-on-Trent, Nottingham and Derby, was progressing to schedule.

“The recently announced acquisition of intu will create a £21bn pan-European portfolio of high-quality retail destinations, in line with our strategy to focus on growing consumer markets,” it said.

“Both businesses have now published their financial results and we are in a position to seek shareholder approval. We anticipate publishing our shareholder documentation in the coming weeks with the EGM scheduled for April.

“If shareholder approval is obtained, the only remaining condition will be competition regulatory approval and following receipt of that approval, the transaction is anticipated to complete in Q4 2018.”

To support the acquisition, Hammerson is targeting disposals of £500m in 2018. It has already sold two sites in the West Midlands to help achieve this target – Battery Retail Park in Selly Oak for £57m and the Wrekin Retail Park in Telford for £35m.