Hammerson in Talks to Sell $1.2 Billion of Assets as Values Fall

(Bloomberg) -- Hammerson Plc is in discussions to sell about 900 million pounds ($1.2 billion) of its properties as it comes under pressure from activist shareholder Elliott Advisors.

The landlord committed to selling at least 500 million pounds of property this year as the value of its portfolio dropped 5.9 percent, the company said in a statement on Monday. It also announced plans to form a new committee to oversee the disposals program.

“This increased focus on strategic disposals, as marked by updated targets for 2019 and a current pipeline of potential sales of over 900 million pounds, signals a positive development in the company’s progress and its ability to ensure that its portfolio of high quality assets delivers compelling value for all shareholders,” according to Elliott Advisors, which has more than 5 percent in the company.

Mall landlords have struggled in the U.K. after a slew of retailers collapsed, shuttered stores and demanded rent cuts last year as they faced a rise of online shopping. That’s damped demand for investment in U.K. malls, which Savills Plc says drove deals to their lowest level since 1996 and prompted the Royal Institution of Chartered Surveyors to issue a warning to property valuers to reflect the havoc in the sector in their valuations.

“2018 was a tough year particularly in the U.K.,” Chief Executive Officer David Atkins said in the statement. “Tenant failures, the structural shift in retail and a more considered consumer created a difficult operating environment, putting pressure on property values.”

Hammerson shares are down about 21 percent from a year earlier. They were little changed at 8:11 a.m. in London.

Other Key Results

  • Hammerson’s net asset value fell 4.9 percent to 738 pence a share, beating the 735 pence consensus compiled by the company itself.
  • The company’s earnings per share -- an increasingly important metric for commercial property analysts at a time when valuations are in doubt -- fell 1.6 percent, as the impact of lost rent from tenant failures and the sale of assets was partially offset by a share buyback.
  • The sale of a stake in the company’s Highcross mall at a 5 percent discount to book value late last year helped reassure investors looking for a floor in shopping center values but the company has sold just four of its retail parks after announcing in July 2018 that it planned to sell the entire portfolio. 

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