Strong Rental Growth Leads the Way
Hammerson’s first-half results reveal a company hitting its stride. Gross rental income jumped 11% year-on-year to £105m, with like-for-like growth (stripping out acquisitions) at a healthy 5%. Net rental income followed suit, climbing 10% to £80m. This isn’t accidental – it’s the payoff from years of strategic portfolio refinement and active asset management. CEO Rita-Rose Gagné nailed it: demand for their prime space “has never been stronger.”
The Engine Behind the Growth
Two key drivers fuelled this performance:
- Portfolio Focus: Hammerson’s disciplined shift towards “the top 1% of locations” is bearing fruit. High occupancy (95% across flagships, up from 94%) and positive leasing spreads (+13% ahead of ERV) show brands are prioritising fewer, high-performing destinations.
- Capital Deployment: £321m deployed over nine months acquiring full control of Brent Cross and Westquay at an average 8.5% yield is now materially boosting income (£27m annualised NRI added).
The Bullring Play: Full Control of a Crown Jewel
The standout news alongside results was the £319m acquisition of the remaining 50% stake in Bullring (Birmingham) and Grand Central. This isn’t just another deal; it’s strategic consolidation of a top-tier UK destination.
Why Bullring Matters
- Operational Powerhouse: Footfall up 5% (June +12% YoY!), sales up 6%, leasing deals signed 25% ahead of previous passing rent. Green Street rates it A++.
- Immediate Accretion: Expected to add ~£22m annualised net rental income and be 4% accretive to EPRA EPS from day one.
- Value Unlock Potential: Significant redevelopment opportunities exist (Edgbaston car park, Grand Central’s Drum concept, Martineau Galleries site).
The Funding Mix
Hammerson is funding this shrewd move through:
- Suspension of the share buyback programme
- Utilisation of existing cash resources
- An equity placing of up to 10% of issued share capital
Pro forma LTV rises to a still-manageable c.37% (from 35%), keeping the balance sheet within investment grade parameters.
Beyond the Headlines: Operational Grip Delivers
The foundations are solid. Key operational metrics underscore the health of the core portfolio:
- Footfall & Sales: Group flagship footfall +1% (Q2 +3%), like-for-like sales +1% (Q2 +2%), outperforming national benchmarks.
- Leasing Momentum: Record H1 leasing – 152 deals (+13% LfL) securing £23m headline rent. Leasing spreads remain robust (+45% vs previous passing rent). Pipeline looks strong at over £26m.
- Repositioning Wins: Success stories like The Oracle (TK Maxx, Hollywood Bowl, Zara signed) and Cabot Circus (M&S, premium Odeon cinema) demonstrate the value-add model, delivering high IRRs.
Valuation Inflection Point
A major psychological and financial milestone: a net portfolio revaluation gain of £26m. This is the first positive revaluation since H1 2017. The portfolio value surged 11% to £3.0bn, driven by the Brent Cross acquisition, income growth, and favourable forex. EPRA NTA per share increased 3% to 381p.
Confidence in the Trajectory: Upgraded Guidance & Dividend Hike
Management isn’t just reporting on the past; they’re betting on the future:
- Dividend Up 5%: The interim dividend rises to 7.94p, signalling confidence in sustainable earnings growth.
- FY25 Guidance Upgraded: EPRA earnings guidance lifted significantly to c.£102m (from c.£95m), driven by better-than-expected LfL growth and the Bullring/Grand Central acquisition. Total GRI growth is now forecast at c.17%.
- Medium-Term Framework On Track: Confidence remains high in delivering 8-10% EPRA EPS CAGR, underpinned by visible income streams and a robust pipeline.
Risks & The Path Forward
Naturally, macroeconomic volatility is noted. However, Hammerson’s focus is on resilient consumer spend concentrated in prime destinations – exactly where they play. The strategy is clear: full control of trophy assets, relentless operational improvement, disciplined capital recycling, and unlocking embedded value (70 acres of strategic land, development potential). The H1 2025 results and the Bullring deal suggest Hammerson has finally turned a decisive corner. The market will be watching closely to see if this momentum can be fully capitalised upon.
