UK shopping centre operator Hammerson PLC (LON:HMSO) posted a loss for 2018, hit by a series of tenant failures in a difficult retail market.
The owner of London’s Brent Cross and Birmingham’s Bullring made a loss of £268.1mln last year, compared to a profit of £388.4mln in 2017, after offloading £570mln worth of properties in the retail park sector. Revenues dropped 9% to £292.4mln.
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The company plans a further £500mln of disposals this year as part of a strategy to sell its out-of-town retail parks and reduce its exposure to struggling department stores, instead focusing on flagship retail destinations.
"2018 was a tough year particularly in the UK,” said chief executive David Atkins.
“Tenant failures, the structural shift in retail and a more considered consumer created a difficult operating environment, putting pressure on property values.”
Net retail income fell 6.2% to £346.5mln, reflecting a £3mln impact from a sharp rise in tenant failures.
Bricks and mortar retailers have come under pressure from fierce online competition and subdued consumer spending.
Last year House of Fraser was rescued from collapse by Sports Direct International PLC (LON:SPD) and HMV entered administration while Debenhams is currently battling for survival.
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Hammerson said the value of its property portfolio dropped 5.9% to £9.94bn and the net asset value per share declined 4.9% to £7.38.
The group maintained its final dividend at 14.8p per share, taking the total for the year to 25.9p, compared to 25.5p in 2017.
In mid-morning trading, shares fell 1.2% to 366.4p.
Peel Hunt reiterated a 'hold' rating on the stock but cut its target price to 400p from 470p. The broker said it now expects dividends this year to flat as the company's plan to dispose of £500mln of properties this year will reduce earnings.
"Shares yield 7% and sit at a c46% discount, but the execution and income risk remain," it said.