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The owner of the Bullring shopping centre in Birmingham and Brent Cross in London reported the first rise in rent expectations since 2017, in the latest sign that the gloom over retail properties is lifting.
Hammerson, one of the UK’s largest listed retail landlords, said estimated rental values (ERV) for its core portfolio were revised up, by 1.7 per cent, for the first time in six years.
The milestone comes as Hammerson this week completed a £500mn programme of asset sales launched in 2021, with the £111mn sale of Aberdeen’s major shopping centre to US investor Lone Star.
Chief executive Rita-Rose Gagné said that with the sales completed the company would now focus on investing into its consolidated portfolio of city centre shopping centres to boost their performance. “For me, going forward now it is about growth,” she said.
Hammerson reported gross rental income rose 6 per cent on a like-for-like basis, and signed 306 new leases at rents 37 per cent higher than previous rates. Gagné said performance “proof points” convinced independent valuers to upgrade ERVs.
The real estate metric is based on third-party valuers’ assessment of likely rents, and shows how improvements in the company’s portfolio and the wider market have translated into optimism about growth.
Retail landlords have suffered a brutal period through the rise of ecommerce and the Covid-19 pandemic. Although footfall is growing, it has yet to return to pre-Covid levels. But investors now increasingly see opportunities for the best-positioned shopping centres as retailers seek fewer and better stores and compete for the best space.
“Hammerson’s results are yet again providing the market with evidence that best-in-class retail space is back in demand. Market rents are growing for the right locations,” said Colm Lauder, principal at consultancy Lingard Capital.
Peel Hunt analyst Matthew Saperia said Thursday’s results showed Hammerson “turning a corner”.
Hammerson has been working to repurpose spaces formerly occupied by traditional “anchor tenants” like Debenhams or House of Fraser by breaking up the large units and leasing them to multiple tenants.
Gagné said the company was still determined to realise value from its stake in Bicester Village-owner Value Retail, but declined to comment on any sale process.
Shaftesbury Capital, the recently-merged London landlord that owes swaths of Covent Garden, Carnaby, Soho and Chinatown, on Thursday also reported robust results with earnings ahead of expectations and 10.4 per cent growth in annualised like-for-like gross income.
