Hammerson, the UK-based owner of city centre destinations with a secondary listing on the JSE, yesterday declared a 5% higher interim dividend of 0.756 pence per share on a payout ratio of 76%, following a strong year operationally and further moves on the third year of a turnaround trajectory.
Further good news for shareholders was the announcement that the board intended to increase the policy payout ratio from its current policy of 60–70%, to 80–85%, after the sale of the Value Retail assets. Plans were afoot to also simplify the share capital through a 1 for 10 share consolidation, and to increase distributable reserves by reducing the company’s share premium account.
“I am pleased to report we’ve had a strong first half. We are realising the benefits of our investments and with the agreed disposal of Value Retail, we have the capacity and capability to accelerate growth and value creation. Our leading city centre destinations are in high demand,” said Hammerson chief executive Rita-Rose Gagné in a statement.
Adjusted earnings of £50 million (£56m) reflected the impact of disposals and adjusted earnings per share came to 1p (1.1p). The loss of £517m mainly reflected the impairment of investment in Value Retail from the carrying value of £1.1bn. The pro forma loan-to-value ratio reflecting the disposal was low at 25%.
The company earlier this week announced the sale of its non-controlling and yield dilutive interest in Value Retail, which it said would ensure a clean exit from a complex structure at an attractive price, and also generate £600m in cash proceeds.
This would be used to deleverage; reinvest into higher yielding assets; and for the return of up to £140m to shareholders via a share buy-back.
In the six months period year-on-year leasing was up 24%. Costs fell 16%. The £500m disposals programme was completed, and the balance sheet was strengthened.
“We have realigned our portfolio to 10 dominant city centre destinations, 93% of which are A rated by Green Street and are … attractive to both visitors and best-in-class occupiers. We continue to reposition our assets, alongside enhanced place-making, commercialisation and digital marketing, responding both to visitor and occupier demand and to stay ahead of evolving trends and the competition,” said Gagné.
Occupancy was strong at 94% while undertaking the repositioning. Footfall was up 1% year-on-year; while new occupier sales densities were 20% higher than previous occupiers.
“After three years of intensive turnaround, we have entered a new phase with the capacity and capability to invest to accelerate growth,” she said.