Ballooning losses at Dundrum Town Centre owner lead to review

Shopping centre operator Hammerson to work on strategic and organisational review

A "thorough" review is under way after losses at Dundrum Town Centre owner Hammerson more than doubled last year, as the shopping centre operator was "hit hard" by the Covid-19 pandemic and associated public health measures.

Along with Dundrum, Hammerson owns stakes in the Swords Pavilions and Ilac shopping centres in Dublin, where it also plans a major redevelopment of the area around Moore Street. The UK-based group has operations in several European countries.

In its full-year results for the year ended December 31st, 2020, the group said its loss for the year was £1.7 billion (€2 billion), compared with a loss of £781 million in the previous year.

The biggest driver of the loss was the revaluation deficit on the group’s property portfolio of £1.4 billion compared with a loss of £1 billion in 2019.


Net rental income was £151 million – or 41 per cent – lower than the prior year, of which £77 million related to increased provisioning.

Hammerson said all sectors suffered a decline due to the effects of the pandemic on revenue streams coupled with lower collection rates and increased risk of further tenant failure.

The UK was the worst affected, with flagships and retail parks there suffering like-for-like declines of 51 per cent and 42 per cent respectively, compared with losses of 18 per cent in France and 30 per cent in Ireland.

The group recognised a loss of £157 million in relation to its share of the property revaluation of premium outlets, compared with a gain of £200 million in the previous year.

The group’s adjusted earnings for 2020 were £36.5 million, £177.5 million or 83 per cent lower than in 2019.

Hit hard

In terms of portfolio valuations, Hammerson wrote down the value of its shopping centres by almost £2 billion. Its Irish flagships were down 17.5 per cent, retail parks down 23.3 per cent and value retail down 6.2 per cent.

These issues were partially offset by a profit on disposal of £12 million, compared with a loss of £92 million in 2019, and the unwinding of the impairment on the reclassification of retail parks from assets held for sale during 2020, totalling £22 million.

“By any measure, 2020 was an unprecedented year, with every business and household affected by Covid-19,” said Hammerson chief executive Rita-Rose Gagné.

“As our results show, Hammerson was hit hard. The retail sector, already in the grip of major structural change, has been significantly impacted by the restrictions imposed to tackle the pandemic, and we’ve also seen an increasing number of retail failures.

“Combined, this has resulted in the largest fall in net rental income and UK asset values in the group’s history.

“However, if this pandemic has highlighted anything, it is how much we all crave human contact as inherently social beings.

“As a business, Hammerson provides the places and social infrastructure where people want and need to be, and I am confident it will have a vital role in shaping neighbourhoods and communities in the future.”

Further disposals

Ms Gagnés said the “immediate focus” in 2021 is leading Hammerson through Covid-19 to safety.

“This means further disposals to strengthen the balance sheet, managing refinancing and sharpening our operations to maximise income,” she said. “We will then focus on realising the quality of our destinations to drive the business forward.

“We are currently working on a thorough strategic and organisational review that will map out a route to future growth to transform the business in the context of what will remain a tough economic and structural backdrop.”

Leasing activity was down 35 per cent compared with 2019, while the company said footfall was “severely impacted” by Covid-19 closures and city centre locations of flagships. There was a “measured recovery” during periods of reopening.

On a more positive note, the closure of destinations significantly reduced utility demand, with energy use down 18 per cent and carbon emissions down 29 per cent.

The company proposed a final dividend of 0.2p per share, with an enhanced scrip dividend alternative of 2p per share.

Colin Gleeson

Colin Gleeson

Colin Gleeson is an Irish Times reporter