Hammerson plc R.E.I.T. ((GB:HMSO)) has held its Q4 earnings call. Read on for the main highlights of the call.
The recent earnings call for Hammerson plc R.E.I.T. painted a mixed picture of the company’s financial health and strategic direction. While the company showcased impressive improvements in its balance sheet and revenue growth, challenges such as declining Irish valuations, a drop in reported Gross Rental Income (GRI), and a significant International Financial Reporting Standards (IFRS) loss were highlighted. Despite these challenges, the company expressed confidence in its strategic positioning and future growth potential.
Strong Balance Sheet and Revenue Growth
Hammerson reported a robust balance sheet with a Loan-to-Value (LTV) ratio of 30% and significant revenue growth in key areas. The company achieved strong leasing performance, signing 262 leases on 1 million square feet of space, generating GBP 41 million of rent, which marked a 2% increase on a like-for-like basis.
Increased Footfall and Sales Performance
The company experienced an increase in foot traffic, welcoming 170 million visitors, with footfall up by 2%. Sales performance was particularly strong, with a 5% increase in the U.K. and a 3% rise in France. The Bullring shopping center stood out with an 11% increase in sales growth, outperforming its peers.
Operational Efficiency and Cost Reduction
Hammerson made significant strides in operational efficiency, reducing operational costs by 16% year-on-year, surpassing its guidance. This efficiency contributed to adjusted earnings of GBP 99 million, supported by a 4% increase in dividends.
Positive Leasing and Rental Growth
Leasing activities in early 2025 generated over GBP 9 million, with rates 10% above previous passing and 11% over Estimated Rental Value (ERV). Long-term deals were signed at 56% above previous passing rents and 13% ahead of ERV, indicating strong rental growth potential.
Decline in Irish Valuations and Revenue
Irish valuations declined by 13%, attributed to a valuer’s interpretation of a distressed debt sale. Additionally, like-for-like rental income in Ireland decreased by 6% due to strong comparables and an overrented unit.
Reported GRI Decline and IFRS Loss
The company faced a decline in reported GRI, down GBP 21 million year-on-year due to disposals. The IFRS loss was substantial at GBP 526 million, with GBP 497 million attributable to Value Retail.
Forward-Looking Guidance
Hammerson’s forward-looking guidance for the 2024 fiscal year indicates significant progress in strategic realignment and operational performance. The company achieved a 30% LTV post-reinvestment in the Westquay asset and reduced vacancy to less than 5%. Valuations increased in the U.K. and France, while Ireland saw a decrease. Sales growth was notable, and the company anticipates further growth from investments and acquisitions, with an entry run rate of adjusted earnings at GBP 85 million for 2025.
In summary, Hammerson plc R.E.I.T.’s earnings call highlighted a balance of positive developments and challenges. The company demonstrated strong financial metrics and operational efficiency, though it faces hurdles in Irish valuations and GRI declines. The forward-looking guidance suggests optimism for future growth, underpinned by strategic investments and a disciplined approach to capital allocation.