Owner of Aberdeen’s Union Square boosts balance sheet but losses widen

Hammerson, the retail property giant that owns Aberdeen’s Union Square centre, has seen its losses widen after selling off sites to bolster its balance sheet.

Hammerson has a vast portfolio of premium shopping and leisure centres including Union Square in Aberdeen. Picture: Contributed

The group, which is also joint owner of the Silverburn shopping centre in Glasgow, racked up a £573.8 million pre-tax loss in the year to 31 December, widening from a £173.3m deficit in 2018, as it received lower rental income.

Hammerson said occupancy levels remained high, but the firm has seen like-for-like rental income fall by 6.7 per cent as it was hit by retailer administrations and restructurings.

During the year, the firm saw 33 of its retailer partners enter administrations or undergo a company voluntary arrangement (CVA) restructuring deal, affecting 94 units across Hammerson’s vast portfolio, which also includes Birmingham’s Bullring.

Despite that, occupancy remains high, with 97 per cent of units filled, although the firm saw new leasing volumes dip, generating £11.2m in income in 2019 compared to £14.4m in the previous year.

Earnings were impacted by the firm’s disposals programme, which generated £542m during the year, surpassing its £500m target.

Last week, the firm also announced its largest disposal in a decade as it sold its nine remaining retail parks for £455m. Those sites included Falkirk’s Central Retail Park.

Focus

Hammerson said it will maintain its focus on reducing debt during the current year amid an “uncertain” outlook for the UK retail market.

Chief executive David Atkins said: “We have taken decisive action over the past 12 months to reduce debt and significantly reshape the portfolio. Against a challenged retail and investment backdrop, we have exceeded our 2019 disposal target, exited the retail parks sector as we said we would and reduced debt by a third.

“With the outlook for the UK retail market remaining uncertain, we believe we should maintain our focus on reducing debt during 2020. In strengthening our balance sheet further, we will create a more resilient business and also generate significant liquidity which could, at the appropriate time, be deployed to create enhanced returns for shareholders.

“The magnitude of the challenge facing UK retail is significant. However, as brands look to optimise their store estates and strike the right balance between online and physical retail, the best destinations continue to be highly relevant – this is highlighted by the rise in visitor numbers across all our regions.”