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Retail REIT Hammerson produced a trading update on 2021 that hints at improved operating conditions for the retail real estate sector.
The company said that it expected full-year earnings for 2021 to be in the region of £75M-£80M, ahead of its previous guidance of £60M. It said the improved numbers related to better trading since its last financial update on 2 December.
Shares in the company rose 4% following the update.
“Gross rental income was ahead of expectations across the group's managed portfolio, whilst [outlet mall operator] Value Retail delivered a stronger-than-expected Q4 performance,” Hammerson said.
In the group's managed portfolio, as government restrictions were reintroduced during the key Christmas trading period, footfall in the UK and Ireland softened marginally, whilst France remained resilient,” Hammerson said. Overall, footfall recovered strongly during the year, particularly when restrictions were eased, with some destinations exceeding 2019 levels and consistently exceeding national indices. This trend has continued in 2022 to date, Hammerson added.
UK sales remained strong around Christmas, at 97% of 2019 levels in November and 93% in December; sales in France were 92% of 2019 levels in November and 93% in December.
Footfall at Value Retail in Q4 was just under 90% of comparable 2019 levels, with brand sales approaching 95% and spend per visit marginally ahead.
Hammerson said it had collected 97% of the rent it was owed for 2020 and 88% of what it was owed for 2021.
Q1 2022 collections to date are at 74% of billable rent, it said. As with the last two quarters, the UK remains the strongest performer with 78% of rent collected, while Ireland stands at 75% and France at 66%. Hammerson said it expects collection rates to continue to improve as the quarter continues.
In a note, Goodbody analyst Colm Lauder said Hammerson’s earnings numbers had been boosted by asset disposals and premiums paid by retailers to surrender leases, though much of the surrendered space had already been let up.
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