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Re sale of Retail Parks - alas that's what happens when you overgear a business and hit an unexpected shock like Covid.
They had to sell to raise cash and so were a distressed seller. A shame I know but there wasn't much else they could do.
I take comfort that RRG has laid out a sensible strategy to work the current portfolio mix to maximise value and that there are two well capitalised shareholders on the register who are clearly in for the long term. The headline drop in valuations was half rent roll reductions and half yield (market sentiment) both of which you would expedct to reverese as the economy improves. Even after that we still have a NAV per share at double today's share price. I think we have reached an inflexion point and although it will be a hard grind upwards I think we can now expect the balance of news to be good rather than bad.
Re: "...Obviously government don't care if Hammerson go bust as there will be a vulture fund somewhere to buy it up on the cheap. Not even handed..."
There's nothing for them to worry about, it's just change of ownership (next owner will continue doing the roughly same thing anyways), employees are protected as served first hand in creditor' priority list (and taxes)
Similar for rent moratorium - it's just a question which side takes a hit in losses, as net result (for gov) there's no difference (but we might expect heavy court cases against gov actions harming one side in favor of other).
Although rent-seeking activities/businesses technically have less of entrepreneurship/innovation spirit in them therefore are considered as less value-adding to society and in case if they fail there's minimum asset/capital deterioration while with entrepreneurship it's harder to recover from technology/structure and human capital losses - but it's retail so doubtful statement too. (I'm aware of risks involved in development but it's just technical balance between sides as defined in contemporary economics).
What I'm not so keen on are the £1.2bn plus retail park sales at yields of 7.5-8% to private equity. Massive amount of rent gone from the one retail class that has held up well in the pandemic. I appreciate the panic to reduce debt but this is a massive hit to profitability going forward. I hope they know what they're doing. Government rent moratorium has clearly put them under enormous pressure and appalling to extend it until March next year. Obviously government don't care if Hammerson go bust as there will be a vulture fund somewhere to buy it up on the cheap. Not even handed.
Main things to look at ::
· Net debt reduced by 16% to £1.9bn with ample liquidity of £1.5bn1 in undrawn committed facilities and cash
· Refinanced near term debt maturities with the issuance of €700m 1.75% sustainability-linked bond - repaid €500m 2022, and 53% of €500m 2023 bonds, and £297m of private placement notes
Encouraging re-opening and operational performance
· Footfall across our cities is currently averaging 80% of 2019 level
· Group rent collection for FY20 now at 90%, H1 2021 71% and Q3 at 65%
· Occupancy: Group occupancy of 93% (FY20 94%)
Slowly turning things around, Rents collections rising...
so, here it goes, £376m loss, let's see how much they wrote off from the asset due to devaluation.
Here's another example of 1B+ property fund going down (Germany/Ireland) last year
https://www.irishtimes.com/business/financial-services/liquidator-of-dolphin-linked-firm-queries-significant-salaries-and-fees-1.4635288
Thank you all for your insight guys
It will be reported net loss obviously (but they had it 3 years no row anyways, thus nothing new), although they do try to sugar-coat it for investors (e.g. last market update was tailored to paint a rosy picture by asymmetrically shifting accents and comparing vs plan on a first place instead of YoY methodology) - this alone speaks volumes about dirty play and serious questions about quality of governance.
Intu went belly up last year and I'm not sure covid had any impact there at all (as it was just technicality 3 months later after lockdown) - so it is industry-wide transformation.
With long pause in business activity and shopping vs mounting insolvencies there's nothing much to expect really, just add another wave of write-offs from asset fair (re-)valuation due to accelerated shift of preferences into online model.
I'm living next to one of their so called "flagships", shopping every day near-by, this hmso' shopping center is far from living through best times as waste majority of square meters blocks remain closed or hardly have customers at all. I mean you can cut down rental rates to keep space occupied - but it's easy to guess what happens to revenues considering what you don't have much of a control on costs.
Has recent equity raise helped? yes, they can stay afloat longer, but interest expense on debt will keep buzzing all the time badly denting P&L each period..
Not sure if current 1.6b mcap is justified .. considering all things... but short-term liquidity should be fine (even after repo twists on bonds) - the question rather is if they have what it takes for recovery or it's a slow money-burn without much of turnaround prospects with rip-off by creditors/debt-holders further down the line.
The planning for Leicester has been revised as of last week. Height was reduced which knocks off about 50 flats from the scheme but it is much more likely get passed.
Dublin was only submitted recently so looking more back end of the year.
They’ve already said it will be scrip divi’s til the end of this year. If the rent collection is higher as it should be, then they have no choice but to give a higher scrip divi due to reit rules.
NAV will probably come in evens or lower due to the actual valuations being a couple months ago. But we should not see as big write off as in the last updates - all the big luxury companies are showing sales soaring and Hammerson is at that top end.
Planning moving at normal pace (it takes time) no date on the Leicestershire Planning Committee yet : can’t see it before September. Of more import is Dublin - a consent and revaluation there in Q4 helpful. I’m invested as a development play (not retail revenue). I would like an update on BX too.
Personally (although still positive about the mid term), I think the trading update will be lacklustre, and not show any significant improvement over the last few updates. Many matters are dragging on, such as the planning permissions in Leicester and Dublin and I would like to see some clarity around the strategy review that was announced at the annual results in March and the hiring of McKinsey to oversee such a review. Will be looking for RRG to step up now, she used the March announcements to clear the deck of the company history, now is the time for her to start showing her leadership and way forward, i.e. what she was hired for. Prediction of another scrip div at 2p possibly up to 2.5p.
Update on NAV, and the current discount to NAV would also be useful.
Guys whats ur prediction guys ? What do you think about 6 months results on Aug 5th going to be ?