Hammerson to take full control of Bullring shopping centre

Times

4 days ago

Hammerson is to take full control of the Bullring & Grand Central shopping centre in Birmingham in a deal that underscores the dramatic fall in retail property values in recent years.
The landlord is paying £319 million in cash to buy the other 50 per cent of Bullring & Grand Central owned by its joint venture partner, CPP Investments, the Canadian pension fund.
The purchase, which is expected to complete within the next week or so, values the shopping centre at £638 million — £1 billion less than it was valued at only eight years ago.
Since then, retail property values have been hammered by the rise in popularity of online shopping, which led to the collapse of some of landlords' biggest tenants such as BHS, Debenhams and Topshop.
Hammerson was in trouble when Rita-Rose Gagné took over as chief executive in 2020, in the middle of the pandemic. She has strengthened the balance sheet by selling a number of buildings and whittling Hammerson's portfolio down to just ten city centre malls — five in England, three in Ireland and two in France.
As with Bullring & Grand Central, under her watch Hammerson has bought out its joint venture partners at Brent Cross in London and Westquay in Southampton.
• Hammerson chief's decision to step down surprises market
'This would not have been possible [when I joined],' Gagné, 62, said. 'I had to go through a phase of disposals that had to be done to strengthen the balance sheet. It's been a journey.'
Hammerson is funding the Bullring acquisition through a £140 million share placing plus existing cash resources, which it will top up by suspending its buyback programme.
Hammerson has been back in growth mode since it sold its upmarket outlet shopping centres, including Bicester Village, for £1.5 billion this time last year.
That partly reflects the healthier financial position, but also because Gagné believes that 'we're at the bottom of the market' in terms of mall valuations. In the opening six months of this year, the value of Hammerson's portfolio rose for the first time since 2017 – up 11 per cent to £3 billion.
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For years, shopping centre rents in the UK were only going down, but they have started to recover over the past 12 months or so too. Hammerson agreed 152 leases between January and June with tenants, on average, paying 13 per cent more than they were previously. Its occupancy rate has nudged up to 95 per cent from 94 per cent last summer.
'Since Covid, occupiers have been flying to quality,' Gagné said. 'Brands are shifting towards fewer, higher-performing spaces. They are rationalising their estates and there is a shortage of the quality space [they want] … which is creating rental tension and we are able to close deals faster.'
Hammerson's net rental income rose 4 per cent to £80 million in the six months to the end of June, up from £73 million in the same period of 2024. Half-year earnings dipped 3 per cent to £48 million from £50 million, but that was because of last year's disposals and was better than what the market had forecast.
The combination of stronger demand and the expected financial boost from taking full control of Bullring & Grand Central means the company will make more money than it had originally expected in 2025. It had guided to annual earnings of £95 million but now thinks £102 million looks more likely.
The interim dividend, to be paid on October 16, was lifted by 5 per cent to 7.94p which 'reflects [the board's] confidence in earnings growth trajectory'. Hammerson shares rose 3½p, or 1.2 per cent, to 297¾p on Thursday afternoon.