Hammerson has indicated that the worst impacts of the pandemic may be behind it, but the shopping centre landlord said recent moves by the UK government had hampered its recovery.
The group, which owns malls in Britain, France and Ireland including Dundrum Town Centre, has been among the landlords worst affected by the pandemic, during much of which malls have been forced to close.
On Thursday, Hammerson posted a pre-tax loss of £354 million (€416 million) for the six months to June 30th, as the value of its estate dropped 6.4 per cent to £5.5 billion.
The losses were an improvement on the previous year, during which the part-owner of Swords Pavilions and Ilac shopping centres in Dublin reported a £1.7 billion pre-tax loss and had 21 per cent wiped from the value of its portfolio.
Rita-Rose Gagné, who took over as chief executive in November, described the period as "an inflection point" but said the company's recovery had not been helped by the government's decision in June to extend a moratorium on evicting commercial tenants for nine months.
“The rent moratorium has been extremely surprising to me and it is inexplicable to me that it would go on so long, to 2022,” said Ms Gagné, who is tasked with turning round the fortunes of the company after years of retail turmoil and falling shopping centre valuations.
The UK government has provided little guidance on how landlords and tenants should address the rent debt built up over the pandemic, which now totals more than £6 billion, according to Remit Consulting.
"The moratorium makes life challenging," said Colm Lauder, an analyst at Goodbody.
In Ireland, Hammerson and other landlords have been able to successfully challenge tenants that have withheld rent, but the ban prevents them from doing so in the UK, he said.
By limiting the ability of landlords to negotiate, it has unnecessarily drawn out disputes over rent, said Ms Gagné.
“When I came in, the situation was quite challenging even without Covid,” she added. She has focused on repairing the company’s balance sheet, selling off a portfolio of seven retail parks to Canadian investor Brookfield for £330 million in April and issuing a €700 million bond in May.
“That puts us in a position where we’re standing on more solid ground, and enables us not to be a forced seller,” she added.
The company said on Thursday that it required no significant refinancing until 2025. But an auditor’s report found that in a “severe but plausible adverse scenario”, failure to refinance a £750 million loan maturing in December 2022 could impact Hammerson’s ability to continue as a going concern.
Himanshu Raja, the group's chief financial officer, said the auditor's note was "a technical issue" and that Hammerson "fully expected to refinance those".
The mall owner has signed new leases worth £9.8 million over the six months, more than double for the same period of 2020 and 17 per cent up on the first half of 2019.
Most of that demand has come in France and the UK, with tenants in the UK wary of taking on new commitments despite rents having fallen 29 per cent from their 2017 peak.
In Dublin, the company is currently seeking permission for a mixed retail, office and residential scheme on the large site, formerly known as the Carlton site, between O’Connell Street and Moore Street.
Hammerson has collected 71 per cent of the rent owed by tenants for the first half, an improvement on previous periods of the pandemic. It also reported an improvement in its arrears position, with 90 per cent of 2020 rent now collected.
“We’re probably not done yet, there’s probably a bit more pain to come,” said Ms Gagné. – Copyright The Financial Times Limited 2021