The Phoenix Vol.38 No.13

Perfect storm
hammers Hammerson
shareholders
HAMMERSON PLC (owner of Dundrum Town Centre)
is the most significant retail property investor in this
country. However, CEO David Atkins stepped down last
month and the board is undergoing dramatic changes
as the company finds itself in a perfect storm. The
shareholders have seen the share price collapse and they
will be particularly concerned to hear that a paltry 14% of
UK shopping centre tenants had paid their second-quarter
rent by the deadline, while last week’s failure of the giant
Intu shopping centre group significantly ups the ante.
Hammerson is the secondlargest
UK prime shopping gross rent roll.
spaces, generating a €50m pa
centre operator, controlling With an annual footfall of
20% of the top 50 UK centres, 20 million, Dundrum is by
not far behind Intu, which far the busiest Irish shopping
has 28% of the top 50. The centre and it came with the
former attempted to take over benefit of the original six-acre
Intu two years ago but, luckily Dundrum shopping arcade,
as it turns out, pulled back at built 40 years ago and, crucially,
the last minute because of the with planning permission for
latter’s huge borrowings and a further one million sq ft. If
the possible significant adverse developed, this would bring
impact of Brexit, never mind the total Dundrum Town
the structural drift of retail Centre complex to a total of
sales to online shopping. 2.5 million sq ft and rank it
But Atkins and the David up there with the biggest in
Tyler-chaired board were also Europe.
responsible, however,
for rejecting a 635p
per share offer for
Hammerson in 2018 by
French giant Klepierre.
(Today the share price
is 87% down on that
figure.)
At one level,
Hammerson thought
it had landed on its
feet in Ireland and,
as soon as it got full
control, it jacked up
Pence sterling
300
250
200
150
100
50
the Dundrum Town Centre’s
car park rates by 50% from
(€2 to €3). With its 3,400 carpark
spaces, this move yielded
an immediate hefty return,
although may not exactly be
in keeping with Hammerson’s
stated vision to “create vibrant
continually evolving spaces in
and around thriving cities…
to deliver value for all our
stakeholders and to create a
positive and sustainable impact
for generations to come”.
The car-park hike also made
the Nama deal look pretty good
value for the British outfit,
adding an additional €5m pa
income stream, which, on the
basis of the exit multiple paid,
was worth €165m.
Dundrum was anchored
by a prime tenant portfolio
– including Harvey Nicholls,
House of Fraser, Marks &
Spencer and Penneys – with
120 retail units in all, as well
as 38 restaurants, a 12-screen
cinema and 3,400 car-park
HAMMERSON
To date, however, other
than getting planning
permission for 105 apartments
adjoining the new centre area,
Hammerson has not activated
this phase-two element of the
whole project.
Of course, the British giant
has had to contend with a
number of shocks, like the pull
out of the big Hamleys toy store
and the refusal of Smyths to
replace it on the grounds of
excessive rents.
Mike Ashley’s long-fingering
of a decision about the
future of the huge 120,000
sq ft space occupied by the
(insolvent) House of Fraser
was an even bigger blow. The
so-called ‘company voluntary
arrangement’ approved by
creditors allowed Ashley to
cancel the lease at any time
he wanted and (no doubt
encouraged by Hammerson)
operated for two years without
paying rent. Last year, however,
he threw in the towel and left
Stocks & Shares
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Hammerson with an empty
space and a big headache.
This issue has been partly
resolved by Brown Thomas
agreeing to lease the bottom
two floors of the fourstorey
House of Fraser
store and, presumably,
the Westons are paying
nothing like the €50
per sq ft previously
charged for big prime
retail space like this and
may well have got a year
or two rent free for the
60,000 sq ft.
Dundrum Town
Centre’s Irish manager,
Don Nugent, thought
he had got Penneys to move
from its current 36,000 sq ft on
the ground floor to occupy the
upper two floors of the House
of Fraser unit, but Covid-19
scuppered the deal for the
60,000 sq ft space.
The €50m rent roll attached
to Dundrum makes it clearly
THE PHOENIX JULY 3, 2020 25
David Atkins
the prime asset in the portfolio
bought by Hammerson. The
500,000 sq ft Swords Pavilion
shopping centre is nothing
like as significant as Dundrum
and the rent roll is only €13m
(and it is only 50% owned),
but it did come with a 16-acre
adjoining development site.
Again Hammerson has done
nothing to progress this.
In the centre of Dublin, the
ILAC Centre just off Henry
Street is also only 50% owned.
This 155,000 sq ft development
is a lot smaller than the other
two and generates a gross rent
of €8m. Again, this asset came
with the adjoining five-acre site
Joe O’Reilly and Liam Maye
assembled on O’Connell Street
on which they were going to
build a huge one million sq
ft retail development centre.
Hammerson has done relatively
little here to really push this
Continued on page 26