UK-based property giant Hammerson has put its Irish and French shopping centres at the top of a new strategy as it faces continuing investor pressure despite seeing off an unwelcome bid earlier this year.
Hammerson operates Dundrum Shopping Centre, Ireland’s largest mall, which it co-owns with Allianz. It is also co-owner at the Ilac in Dublin city centre with Irish Life, and controls the nearby 1916 battlefield site.
It owns half of the Pavillions in Swords, with Irish Life and Iput owning the rest. It also owns outright the Abbey Retail Park in Belfast and has a significant minority stake in the Kildare Village.
Issuing half-year earnings, Hammerson chief executive David Atkins said it saw more stability in European consumer spending in France and Ireland than in the UK, which has been hit by Brexit uncertainty and the collapse of some big retail tenants. The company’s new strategy favours European schemes in Ireland and France over the UK.
Its figures showed its Irish properties posted a 4% increase in net rental income, to £20.2m (€22.7m) in the first six months of 2018, with Dundrum and the Ilac producing “strong income growth”.
Its strategy includes developing lands around the main shopping centres. “The portfolio also includes 27 acres of development land in Dublin which provides the opportunity to further enhance our existing portfolio,” it said.
Net rental income fell 0.1% for its UK shopping centres and dropped 3.4% for its UK retail parks. It projects net rental income will rise by 2% to 6% in Ireland from 2019 to 2021, compared with growth of 1% to 3% for UK shopping centres over the same period.
Hammerson outlined plans to sell off £1.1bn (€1.23bn) in assets by the end of next year, including retail parks in the UK.
Its Irish property assets, which are worth around 10% of its overall property value, will likely account for a greater proportion of its operations following the UK sales.
“It’s pretty turbulent, you’re seeing a lot of pressure on retailers,” said Mr Atkins, of UK retail conditions.
“We’ve seen quite a deterioration in the UK market in the last six months and we’re reacting to that but not shifting away from our desire to own the very best quality destinations in our markets,” he said.
In a report published earlier this year, Goodbody analyst Colm Lauder predicted Irish retail rents will climb 9% over the next two years for “prime” shopping centres.
Hammerson shares which rose 1% in the latest session have lost about 5% in the past year.
Additional reporting by Reuters