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(Alliance News) - Hammerson PLC said Monday it swung to a loss in the first half of 2019, as it continued its disposal programme with the sale of a major stake in the Italie Deux shopping centre in Paris to AXA Investment Managers - Real Assets.
The London and Johannesburg-listed shopping centre owner agreed to the sale of a 75% stake in Italie Deux, and the forward sale of 75% of the Italik extension being built for GBP423 million in total.
The sale reflects a 4.1% net initial yield on Italie Deux, while the total price represents an 8.5% discount to December's book value.
As part of the deal with AXA, Hammerson will complete the Italik extension, which will add a total of 6,400 square metres of additional space to Italie Deux. The extension is due to open in September 2020, and is already 41% pre-let.
The sale of Italie Deux is expected to be completed in the autumn, with proceeds from the sale to go towards reducing debt and strengthening the balance sheet. Following the deal, Hammerson's net debt stands at GBP3.1 billion.
For the six months to the end of June, Hammerson reported a pretax loss of GBP319.8 million, sinking from a profit of GBP55.7 million a year before, due to a revaluation loss of GBP262.7 million, as well as a loss of GBP188.4 million from the share of results in joint ventures.
Adjusted profit dropped by 11% to GBP107.4 million from GBP120.0 million, while net rental income fell by 12% to GBP156.6 million from GBP178.5 million.
Hammerson's portfolio value as at June 30 was down 4% to GBP9.54 billion from GBP9.94 billion as at December 31. Net asset value per share at the end of June was GBP6.85, down 7.2% from GBP7.38 on December 31.
Both the company's net asset value and the portfolio valuation were hit by low transaction volumes and a weak UK retail market, it said.
Hammerson declared an interim dividend of 11.1 pence per share, flat on a year before.
"The UK retail landscape is undoubtedly challenging and traditional high street fashion is under pressure. However, our focus on shifting our line-up towards categories with greater customer appeal and rental growth potential has resulted in over 90% of new leasing to leading consumer and F&B brands," said Chief Executive David Atkins.
"Our absolute priority remains to reduce debt. We stated our intention to achieve over GBP500 million of disposals in 2019 and even in this tough environment where deals are taking longer to transact, we are now most of the way there. We will continue to pursue additional sales throughout 2019 and into 2020 to further strengthen our balance sheet," Atkins added.
Shares in Hammerson were up 1.0% at 273.30 pence in London, while Johannesburg shares were marginally higher at ZAR47.83 on Monday.