Hammerson earnings rise in record year for leasing activity

29th Feb 2024 08:32

(Sharecast News) - Hammerson reported another record year of leasing activity in its final results on Thursday, with 306 deals totalling £46m in headline rent, marking an increase of 23% year-on-year.

The FTSE 250 real estate investor said permanent deals signed rose 37% compared to the prior period, with net effective rent 12% higher than estimated rental value.

In terms of foot traffic, Hammerson saw a 3% increase year-on-year, accompanied by a 5% rise in dwell time.

Like-for-like sales in the UK climbed by 1%, while France experienced a more substantial increase of 3%.

Financially, adjusted earnings grew by 11% to £116m, translating to 2.3p per share, driven by a 6% increase in like-for-like gross rental income and a 4% rise in net rental income.

The company said it continued its cost reduction efforts, achieving a 14% decrease in gross administration costs year-on-year, contributing to a total cost reduction of 24% since the 2020 financial year.

Hammerson said it was aiming for an additional 10% reduction in costs in 2024.

Despite a decrease in the group portfolio value to £4.7bn, primarily due to disposals and derecognitions, Hammerson managed to strengthen its balance sheet.

Net debt decreased 23% to £1.33bn, resulting in a loan-to-value ratio of 34%, while liquidity improved to £1.2bn, up from £1bn a year earlier.

Hammerson reinstated its cash dividend in July, and introduced a new dividend policy aiming to distribute 60% to 70% of annual adjusted earnings to shareholders while focusing on reinvesting in its core portfolio for further growth and value creation.

The board recommended a final cash dividend of 0.78p per share, subject to shareholder approval, bringing the full-year dividend to 1.5p per share.

Looking ahead, Hammerson was optimistic, saying it saw city centres as key locations for commerce and lifestyle, with its destinations in high demand by both occupiers and visitors.

Hammerson said it would capitalise on its strong platform and long-term income visibility, while continuing to pursue operational efficiency and cost reduction measures in 2024.

"This year we delivered a positive performance across our key strategic, operational and financial metrics," said chief executive officer Rita-Rose Gagné.

"Like-for-like gross rental income was up 6%, following another record year of leasing. Occupancy remained strong and footfall and sales were up again.

We've strengthened our operational platform, whilst reducing costs by 14%."

Gagné said that while the company was watching the current macroeconomic environment, its occupiers were "thriving" and its visitor numbers were on the rise in its realigned portfolio.

"We are reaping the rewards of the investments we are making in our core portfolio alongside best-in-class occupiers, which underpins the high levels of demand for our space - we expect this trajectory to continue in the year ahead.

"We have a strong pipeline of leasing and repurposing opportunities.

"There is still more for us to do, but we are now entering a time where having the capability to invest and operate with discipline and conviction will be rewarded."

At 0904 GMT, shares in Hammerson were up 0.56% at 24.92p.

Reporting by Josh White for Sharecast.com.