File picture: James White
File picture: James White

Shopping mall group slashes dividend after losses double

By Edward West Time of article published Feb 26, 2020

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CAPE TOWN – UK shopping mall group Hammerson on Tuesday flagged that it planned to slash its dividend payout after its losses more than doubled to £781.2 million (R15.27 billion) during the year to end December.

The group said that it would pay a final dividend of 14.8 pence compared to 25.9p the prior year as the value of its properties across Europe fell 16.2 percent to £8.3bn during the period.

It said dividend would be treated as a property income distribution net of withholding tax where appropriate.

“The company will not be offering a scrip dividend alternative, but for shareholders who wish to receive their dividend in the form of shares, the dividend reinvestment plan will be available,” Hammerson said.

The group is facing sweeping transformation in the retail sector as consumers increasingly move online and retailers reduce their brick-and-mortar stores.

It said the impact had been particularly felt in the UK, where high property taxes, long leases and the highest online spending in Europe created a major challenge for traditional store owners. Most of Hammerson’s portfolio is in the UK.

Hanmerson said it sold £975m of properties since the start of last year, exceeding targets.

It said that helped to keep the loan-to-value at 38 percent, dropping to 35 percent following the recent sale of a portfolio of seven retail parks.

Net debt reduced to £2.5bn, down from £3.4bn.

The market appeared to view the annual results favourably, and Hammerson’s actions to deal with the changes, as the share price was up 5.58 percent to close at R44.85 on the JSE on Tuesday.

Chief executive David Atkins said no further disposals target were planned this year.

While online shopping has been gaining market share in Britain, rents have been slow to adjust due to the country’s long leases and upward-only rent reviews. UK retail real estate investment trusts have been trying to sell assets and trim debt faster than their property values fall.

Hammerson said that its net rental income fell 11.2 percent during the period after a slew of disposals and falling rents in its UK shopping centres. On a like-for-like basis and including its premium outlets business, rents grew by 0.5 percent. Adjusted earnings per share fell by 8.5 percent to 28p.

It said average occupancy stood at 97 percent.

Planning approval had been obtained to move from purely retail, and for about 1 400 houses to be built, as part of the City Quarters concept at Martineau Galleries, Birmingham; Victoria Hotel, Leeds and Podium at Dundrum, Dublin.

Atkins said Chinese tourists accounted for about 9 percent of sales across its value retail outlets business, and the company was monitoring the spread of the coronavirus carefully.

Average return on capital was down 9.8 percent last year; in the UK flagship centres it was -19.9 percent, in French flagship malls, -10.2 percent, -7.5 percent in Ireland and 8.2 percent in the premium outlets.

”As we drive a faster pace of change in shifting out brand line-up and re-purposing space, we expect to see improved results in the UK,” said Atkins.


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