Hammerson looks to raise £500m through rights issue
Hammerson, the shopping centre operator, is reported to be preparing a rights issue to raise £500m after taking a battering during the COVID-19 crisis.
The owner of Bullring and Brent Cross, among other key shopping destinations, is expected to announce the move along with its interim results on Thursday. This morning it issued a statement to confirm such a move was under consideration.
In addition the statement said: "The Company continues to take pro-active measures relating to the management of its cost base and cash-flow and in recent weeks it secured approval for the issuance of up to £300m under the Covid Corporate Finance Facility (CCFF) from the Bank of England.
"Following the reopening of its flagship destinations across Europe, footfall and sales continue to improve and Q3 rent collection in the UK (excluding monthly payments and deferrals) has increased to over 30%."
It also confirmed it was in advanced discussions on the terms of a possible disposal of its 50% interest in VIA Outlets (which has outlets in Europe) to its joint venture partner APG.
Analysts at Liberum said that the potentially “imminent” rights issue could be between around £500 million and £600 million. Together with the sale of VIA Outlets it could take off some of the pressure, but is not a magic bullet, they warned.
“Successful execution would remove a near-term covenant headache, but not solve the longer-term problem, in our view,” the analysts said.
They added: “We think raising c. £1.3 billion is more like the quantum needed to restore the balance sheet to a more comfortable level. We question investors’ appetite for this transaction in the current market.”
While the ability to collect around a third of the rent due in the third quarter is twice that which they collection for the second quarter, it is still a blow to the business.
In June Intu, which owns the Trafford Centre in Manchester and the Metrocentre in Gateshead, fell into administration after talks with lenders failed. The business was £4.5 billion in debt.