British property group Hammerson, which part owns the Dundrum Town Centre , has unveiled stinging losses as its portfolio of shopping centres slumped in value amid challenges to the retail sector.
The company saw its Irish portfolio dip by £30 million year on year. Its Irish assets include the Dundrum Town Centre, the Ilac Centre and Pavilions in Swords, north Dublin, with Dundrum accounting for two-thirds of the portfolio’s value.
Like-for-like net rental income fell by 7.4 per cent at its Irish properties during the first half of 2019, with Dundrum accounting for the decline due to the House of Fraser administration in late 2018.
The company reported an overall loss of £319.8 million in the six months to June 30th, down from a profit of £55.7 million in the same period a year earlier. On an adjusted basis, profits fell 10.5 per cent to £107.4 million, and net rental income dropped 12.3 per cent to £156.6 million.
The headline loss was largely down to a £423.4 million net revaluation loss on its property portfolio in the first half, as continuing market uncertainty and a slowdown in leasing affected value, particularly in the UK. More than half of this was down to its flagship shopping destinations in the UK, which had a revaluation deficit of £266 million. In France, there was a revaluation loss of £71 million,
However premium locations produced a revaluation surplus of £111 million. Rental income on a like-for-like basis was down 0.1 per cent. For UK flagship destinations the decline was steeper at 6.8 per cent, affected by CVAs and administrations leaving shops empty.
“The UK retail landscape is undoubtedly challenging and traditional high street fashion is under pressure,” said chief executive David Atkins. “However, our focus on shifting our line-up towards categories with greater customer appeal and rental growth potential has resulted in over 90 per cent of new leasing to leading consumer and food and beverage brands. We’ve seen a stronger performance in Ireland and France, alongside continued exceptional results from premium outlets which demonstrates the benefits of our diversified portfolio.”
The group also said it had achieved 90 per cent of its target to sell off £500 million worth of assets.
AXA Investment Managers said on Monday that it was buying a 75 per cent stake in Paris' Italie Deux retail and leisure centre from British property group Hammerson for €473 million.
AXA also announced the acquisition of a 50 per cent stake in the 'Passage du Havre' complex near Paris' St Lazare station from Eurocommercial Properties for €203 million.
"These transactions provide us with an almost unique opportunity to secure access to two prime central Paris retail destinations, on behalf of clients, both of which would otherwise rarely come to market," said Antoine Mesnage at AXA IM. – Additional reporting: PA, Reuters
