TIDMHMSO
RNS Number : 9627H
Hammerson PLC
30 March 2020
Hammerson plc (the Company)
30 March 2020
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EC NO. 596/2014)
("MAR")
COVID-19 update
Hammerson today provides an update on the impact of the global
COVID-19 pandemic on the business.
In this period of unprecedented disruption, our priority is and
will always remain the health and wellbeing of our colleagues,
consumers and partners, whilst protecting the long-term value of
the Company.
In each of our markets, we therefore continue to follow
government advice and best practice closely, and we are taking
appropriate steps to mitigate the spread of the virus. In
particular, we are committed to supporting our colleagues and their
families through this difficult time, and are hugely grateful for
the contribution they have already made to the business in
extraordinary circumstances.
In these circumstances, we believe we should support our
occupiers, particularly smaller and independent brands that are
less resilient to the closure of their space in our centres. We
have received a variety of requests for rent deferrals, monthly
payments, and waivers, which we are reviewing on a case-by-case
basis, taking into account the business model and risk profile of
the occupier, alongside the aid made available by the relevant
governments.
UK
Across the UK retail portfolio, properties and stores have been
shut in line with UK government advice since 24 March other than
for access to essential retail as defined by the UK government.
Overall, as at the end of 27 March (Q+2 day), we have received 37%
of UK rent billed for Q2(1) . Adjusted for rent deferred, switched
to monthly payment, and a nominal proportion waived, we have
received 57% of rent due. We anticipate both figures to increase as
temporary agreements are implemented and further cash is
collected.
1. Includes Scotland flagships where the quarter day fell on 28
February and we have collected 99% of rent due. Scotland's next
quarter day is 28 May.
-- Flagship destinations
Two flagship destinations are fully closed, Victoria, Leeds and
Highcross, Leicester. The essential stores currently trading
constitute around 30 units across the UK portfolio, accounting for
c.4% of UK flagship passing rent.
Overall, as at the end of last week, we have received 35% of UK
flagship rent billed for Q2. On an adjusted basis, we have received
55% of rent currently expected. Q+7 day collections rates for UK
flagships destinations averaged 96% during 2019.
-- Retail parks and UK Other
In line with the approach taken for our UK flagship
destinations, all non-essential stores are shut on UK retail parks.
To date, 36% of Q2 rent billed has been collected from retail
parks, or 62% on an adjusted basis. On our UK Other portfolio,
collection rates are higher and we have collected 49% of Q2 rent
billed, or 61% on an adjusted basis.
France flagship destinations
In France, our flagship destinations have been closed since 15
March, other than for access to essential retail as defined by the
French government, which comprises around 15 units across the
portfolio, accounting for c.3% of France passing rent.
At the request of the French government and in line with our
European peers, we have offered temporary monthly rent arrangements
with all brands in the Hammerson France flagship portfolio, ahead
of the quarter day on 1 April. Payment for the month of April will
be deferred, with further guidance from the government on a payment
timeline expected before 15 April. Currently, May and June will be
due in advance at the beginning of the month.
Ireland flagship destinations
At the direction of the Irish government, our flagship
destinations have been closed since 25 March, other than for access
to essential retail, which constitutes around 25 units accounting
for c.8% of Ireland passing rent.
We are engaged in similar discussions with our brands to those
in the UK ahead of the quarter day on 1 April. At this stage, it is
too early to quantify the potential impact, although we have
already received 16% of Q2 rent due.
Premium Outlets
At the time of writing, 17 of the 20 premium outlets held by
Hammerson's interests in Value Retail and VIA Outlets are closed,
following government directives in the relevant regions. It is not
possible at this stage to quantify the impact of the ongoing
disruption caused by COVID-19 on these externally managed and
independently financed vehicles. Whilst c.36% of Hammerson's share
of GRI is derived from variable rent, it is worth highlighting that
these entities, particularly Value Retail, also entail a higher
degree of variable cost, most notably marketing spend, which will
be curtailed in the near-term.
Liquidity and balance sheet
At 31 December 2019, the Company had GBP1.2bn of undrawn
committed facilities and cash. On 25 March we drew an additional
GBP100m under these facilities to provide surplus cash reserves.
Liquidity will be further increased by the net proceeds of GBP395m
in relation to the completion of the unconditional sale of a
portfolio of seven retail parks, announced on 21 February and
scheduled to complete on 23 April.
As a reminder, the Company's tightest Group gearing covenant is
150%, which compares with 65% as at 31 December 2019 (55% on a pro
forma basis(2) ). The unencumbered asset ratio stood at 1.89x
(2.08x on a pro forma basis) vs a covenant of 1.50x on the private
placement senior notes. Interest cover stood at 3.3x vs a covenant
of 1.25x. The Company has no LTV covenants at a Group level.
Secured debt facilities in the JV and associate structures are
non-recourse to Hammerson.
2. Reflects net proceeds of GBP428m from disposals announced on
21 February 2020 of portfolio of seven retail parks and Abbey
Retail Park, Belfast.
Capital expenditure and administrative costs
At the 2019 full year results on 25 February 2020, the Company
guided to capital expenditure of GBP140m for 2020, of which GBP63
million related to our on-site developments at Les 3 Fontaines,
Cergy and Italik, Paris. These projects are currently suspended as
the workforce is unable to be on site. Material deferrals and
efficiencies have also been identified among the remaining forecast
capital expenditure and no new expenditure will be committed in the
near-term.
Significant savings have also been identified in property,
administrative and service charge cost across all territories, with
a reduction of c.40% on average expected for Q2 service charges in
the UK & Ireland to support our brands.
2019 final dividend
The Board remains confident in the financial position of the
business. It is clear, however, that COVID-19 will have a material
impact on the Group in 2020. As a result, and given the significant
uncertainty about the duration of the pandemic, the Board has
adopted a prudent approach and decided that it is no longer
appropriate to recommend the final dividend of 14.8 pence per share
for the financial year ended 31 December 2019. The resolution
relating to the proposed 2019 final dividend will consequently not
be put to a shareholder vote at the AGM on 28 April.
The Board is also retracting its dividend guidance for 2020,
although it remains mindful of its REIT tax obligations.
The Board strongly believes that conserving liquidity is the
right decision for the business, and in the long-term interests of
shareholders and colleagues.
Guidance withdrawn
It is too early to ascertain and quantify the impact of the
ongoing period of disruption on income, earnings, net assets and
cash flows, and as a result we are suspending all previous
guidance. We will continue to closely monitor the developing
situation and update the market as appropriate.
The announcement above has also been released on the SENS system
of the Johannesburg Stock Exchange.
Contacts
Hammerson
Josh Warren, Head of Investor Relations
Tel: +44 20 7887 1053
josh.warren@hammerson.com
Catrin Sharp, Head of Corporate Communications
Tel: +44 20 7887 1063
catrin.sharp@hammerson.co m
FTI Consulting (for Hammerson)
Dido Laurimore
Tel: +44 20 3727 1000
dido.laurimore@FTIConsulting.com
Notes to editors
Hammerson
Hammerson creates vibrant, continually evolving spaces, in and
around thriving European cities, with a focus on flagship retail
destinations and premium outlets. Key retail venues include,
Bullring & Grand Central, Birmingham; Bicester Village,
Oxfordshire; Freeport Lisboa Fashion Outlet, Lisbon; Dundrum Town
Centre, Dublin; and Les Terrasses du Port, Marseille. We manage
over 2,000 brand relationships and during normal trading hours,
over 80,000 people visit our venues hourly across our flagship
destinations in the UK, France & Ireland.
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END
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