Hammerson Weighs Selling Shares, Assets as Covid Hits Malls

(Bloomberg) -- Hammerson Plc is considering raising capital and selling some of its most prized assets to ride out the coronavirus crisis that's battering malls and stores.

The developer confirmed on Monday that it's looking at a possible share sale, without saying how much it could try to raise. Sky News reported on Saturday that Hammerson seeks to raise as much as 600 million pounds ($784 million).

Hammerson also said it's in advanced talks on the terms of a sale of its 50% stake in VIA Outlets to its joint-venture partner, Dutch pension fund APG, according to a company statement. The luxury outlets unit has been one of Hammerson's best-performing businesses in recent years, luring bargain hunters from all over the world.

The company's shares fell as much as 13.4% in London on Monday morning.

Mall and store owners have been hit hard by the coronavirus pandemic, as retailers were forced to close and failed to pay rent while consumers spent more online. The fallout has already claimed Hammerson rival Intu Properties Plc, which collapsed into administration in June after failing to agree on loan waivers with lenders.

Raising equity and selling the VIA Outlets stake could be a “sensible approach” to shoring up the balance sheet if it succeeds in boosting liquidity and giving the company more breathing room with lenders, Bloomberg Intelligence analyst Sue Munden wrote in a note on Monday.

Debt Load

With the value of Hammerson's retail assets expected to decline, raising 600 million pounds of equity would be at the “lower end” of what the company needs, Liberum analyst Tom Musson wrote in a note to clients. Hammerson needs to raise about 1.3 billion pounds to keep its debt load at a “more comfortable” level once those writedowns are factored in, he said.

Hammerson was seeking to cut debt and sell some assets even before the virus outbreak. It has about 2.4 billion pounds of debt, according to a company filing from February. The company exchanged contracts to sell a portfolio of retail parks to private equity firm Orion Capital Managers earlier this year, but the deal subsequently collapsed.

In a bid to shore up its cash flow, Hammerson said it had received approval to issue as much as 300 million pounds of commercial paper under the the Bank of England's Covid Corporate Financing Facility. The program is intended to help the biggest companies in the U.K. weather the pandemic by bolstering their liquidity.

Hammerson has collected just over 30% of the rent it was due for the third quarter, according to the statement.

©2020 Bloomberg L.P.