- £100 million in profit expected for 2022
- Leasing levels strong and rent collections improve in third quarter
- Liberum says benefiting from ‘return to normality’
Shopping centre investor Hammerson (HMSO) has unveiled a surprisingly upbeat assessment of its prospects in its third quarter trading update.
This positivity is at odds with an extremely gloomy retail backdrop, reflected in the latest figures from the British Retail Consortium which despite showing a 1.6% rise in the value of goods sold online and in stores in October, represented a significant ‘real terms’ drop in spending when inflation is considered.
Hammerson shares were up 7.6% to 23.1p, having earlier been up as much as 10%. The owner of the Bullring centre in Birmingham said demand for prime shopping space remained robust, with leasing levels strong and rent collections improving in the three months to 30 September.
The company pointed to an occupancy rate of 95%, rent collections of 93% and like-for-like gross rental income up 11% for the first nine months of 2022, helping to underpin an expectation for 2022 earnings to be at least £100 million compared with £80.9 million in 2021.
‘BENEFITED FROM A RETURN TO NORMALITY’
Hammerson added that it had signed 221 leases year-to-date, representing £17 million of headline rent.
Footfall in its UK and Irish retail assets is at around 90% of 2019 levels, while in France this figure is at 95%. Hammerson continues to look at the sale of non-core assets to raise around £300 million with a target of concluding these disposals by the end of 2023.
Liberum Capital analyst Bjorn Zietsman: ‘Hammerson has benefited from a return to normality as lockdown restrictions eased, but we expect yield shifts to continue to negatively impact HMSO’s property valuations.
‘We raise our 2023 rental growth expectations, and while we think there is still a high risk of valuation declines leading to a potential covenant breach, this is not our base case.’
