Shopping centre developer and owner Hammerson has put construction work on hold on major new developments, blaming ‘heightened uncertainty’ in retail markets
As a result, Chapman Taylor’s £1.4 billion extension of Brent Cross shopping centre, which Laing O’Rourke had been set to deliver, remains parked. The practice said it had not being working on the scheme since last October.
The developer also admitted it was ‘reviewing’ its Hawkins\Brown-designed redevelopment of the Whitgift Centre in Croydon to ’ensure it [responded] to the changing retailer requirements.
In its full-year results for 2018 released this morning (25 February) the company said: ‘Reflecting the heightened uncertainty levels, particularly in UK retail markets, in July we decided to defer the start on site at Brent Cross.
‘Given our focus on reducing debt during 2019, we do not expect to commit to any major projects until markets stabilise.’
However, Hammerson will continue its planning and design work on other schemes, such as its joint venture development with Goodsyard scheme in the City of London.
Next week a second consultation will begin on the revised and downsized proposals drawn up by FaulknerBrowns Architects with Eric Parry Architects, Buckley Gray Yeoman and others (see below). It is understood revisions to the existing planning application will be submitted in the Spring.
According to today’s trading figures, Hammerson plunged to a £266.7 million pre-tax loss for 2018, down from a £412.4million pre-tax profit the previous year.
Chief executive David Atkins said 2018 had been 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,’ he said.
In addition to halting all major projects, the company is also planning to sell off at least £500 million of its property portfolio in 2019, with discussions underway for transactions worth up to £900 million.
The new sales will be on top of the £570 million of disposals it made in 2018.
Hammerson is also battling with £3.4 billion of net debt on its balance sheet. Income from the disposals will be used to help the company meet its target of cutting net debt target to less than £3 billion by the end of 2019.
Atkins said: ’We believe a successful deleveraging programme will best position Hammerson for the current environment and beyond.
’Disposals will also enable us to prove the inherent value of this business – which we believe is not recognised in the current equity market.’
Hammerson’s shares have dropped 35 per cent from a 12 month high of 570p last March to around 370p today.
Last May Hammerson called off an attempted £3.4 billion takeover of its rival Intu after a deterioration in the retail market.
Goodsyard ©faulknerbrowns (2 of 2) colour