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19 Jan 2021 | 08:38

Hammerson rent collection improves as market remains 'challenging'

(Sharecast News) - Hammerson said on Tuesday that market conditions had remained "challenging" over the last three months, with national lockdowns introduced in the UK, Ireland, and France in November, and "significant restrictions" in place across its portfolio through December. The FTSE 250 retail landlord said there were currently national lockdowns in Ireland and the UK, with "significant restrictions" in place across France and continental Europe.

It did report "encouraging" footfall recoveries during the Christmas trading period from 30 November to 24 December, following the easing of lockdowns at the end of the November.

France and Ireland flagships benefited from seven-day average footfall of up to 90% of the prior year, while the UK delivered a more variable footfall performance, with city centre-focused flagships peaking at more than 60% of prior year, and 100% for retail parks.

During the period, up to 75% of occupiers in the UK were open or offering click and collect, with that figure being 95% in France and 100% in Ireland.

Looking at the first quarter of 2021 to date, Hammerson said that since the introduction of tighter restrictions, as at 17 January in the UK about a quarter of its occupiers were open, either offering essential retail, click and collect, or takeaway and delivery services.

Meanwhile, its assets in France were now subject to an 1800 CET national curfew, primarily impacting food and beverage and leisure brands.

In Ireland, Hammerson's flagships were only offering essential retail and takeaway or delivery services.

Following the Irish government's temporary ban on click and collect for non-essential retail, around a quarter of occupiers were operating.

Footfall has declined in line with the introduction of new restrictions, particularly across UK flagships and Ireland.

In its value retail portfolio, Hammerson said just over half of the 'villages' in the portfolio were currently closed, following the introduction of additional lockdowns across Europe.

Performance had been "robust" during periods when villages had been open, with the virtual shopping service expanding "strongly" during periods of closure.

Despite the challenging trading environment, the company said its leasing teams had worked hard to reach agreements with retailers, leading to "significant" increases in rent collection.

At a Group level, 41% of first quarter 2021 rent due had been received, with the UK collecting 41%, consisting of 36% collection at flagships and 64% from retail parks.

In France, first quarter rent collection to date stood at 46%, and Ireland was at 31%.

"Following receipt of the equity issuance in September and the disposal of the majority of its share of VIA Outlets in November, raising gross proceeds of £829m, Hammerson has made repayments of the group's gross debt, in accordance with its stated intentions for use of net proceeds in the prospectus in August," the board said in its statement.

Those repayments included a full repayment of drawings under its revolving credit facilities, which had £568m drawn as at 30 June, which was completed in October.

Offers of prepayment at par to private placement noteholders had also been made, under the amendment agreement announced on 1 July, for a total of £226m, being 30% of the total net proceeds in excess of £50m.

Acceptances of that offer totalled £169m, and prepayment was completed in December, saving £4.3m of interest costs on an annual basis.

Finally, Hammerson said it had made a full repayment of the £75m maturing May 2021 issued under its approved £300m Covid Corporate Financing Facility (CCFF), completed in December.

"Following these transactions, Hammerson continues to maintain high levels of liquidity, having access to its £1.25bn of available undrawn revolving credit facilities as well as substantial cash holdings," the board added.

At 0846 GMT, shares in Hammerson were up 2.09% at 23.41p.
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