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COVID-19 update
Hammerson plc
(Incorporated in England and Wales)
(Company number 360632)
LSE share code: HMSO JSE share code: HMN
ISIN: GB0004065016
(‘Hammerson’ or ‘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 Q21. 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.
- 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 £1.2bn of undrawn committed facilities
and cash. On 25 March we drew an additional £100m under these facilities to
provide surplus cash reserves. Liquidity will be further increased by the net proceeds
of £395m 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 basis2). 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.
Capital expenditure and administrative costs
At the 2019 full year results on 25 February 2020, the Company guided to capital
expenditure of £140m for 2020, of which £63 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.
Hammerson has its primary listing on the London Stock Exchange and a secondary
inward listing on the Johannesburg Stock Exchange.
Sponsor:
Investec Bank Limited
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.com
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.
Date: 30-03-2020 08:00:00
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