Union Square owner swings to loss as retail failures dent income

Shopping centre heavyweight Hammerson has swung to a full-year loss as property values came under pressure during a year of retail failures.

Hammerson chief executive David Atkins said 2018 was ' a tough year' in the UK. Picture: Contributed

The owner of Aberdeen’s Union Square revealed a pre-tax loss of £266.7 million for the year to 31 December, down from a profit of £413m in 2017.

Net rental income declined by 6.2 per cent to £347.5m.

David Atkins, chief executive of the group, which also owns Glasgow’s Silverburn, said: “2018 was a tough year, particularly in the UK. Tenant failures, the structural shift in retail and a more considered consumer created a difficult operating environment, putting pressure on property values.”

Major retailers including Maplin and House of Fraser went into administration during the last year, while many other chains closed down stores under a form of insolvency known as a company voluntary arrangement (CVA).

Hammerson said net rental income had dropped by 4.3 per cent at its retail parks due to tenant failures and CVAs, while the total value of its portfolio dropped 5.9 per cent to £9.94bn.

The firm expects further weakness in the UK market until the outcome of Brexit is determined.

The group sold off £570m worth of assets in 2018 and unveiled plans to dispose of “at least” a further £500m in the coming year as part of its commitment to exit retail parks.

It is currently in talks over possible transactions with a total value of up to £900m.