Hammerson, the retail-led city development-focused UK REIT, has posted record leasing figures, a major lift in its portfolio value and committed to more acquisitions in its full year results for the year ended 31 December.
Speaking to CoStar News, the REIT's new chief executive Rob Wilkinson, who has been in the role for a handful of weeks, said he had been impressed by what he was seeing.
"So far so good, and first impressions are very positive," he said. "Three things stand out for me. The portfolio is unique with very high quality retail-led destinations across Europe and with a management team that cares passionately about these destinations. It is also a strong data led technology platform, and financially we are really well placed for the next phase of growth."
Wilkinson said the results were undoubtedly strong and ahead of analysts' consensus. "Operationally it is very strong. Earnings and dividends are up, the portfolio value is up by 4% year on year in terms of capital value – and overall up by 33%. We have seen positive capital returns driven by rental growth and yield compression for the first time in a while in the UK and Ireland."
The period has been one of increasing scale for the business with total net rental income of £180 million up 23% and the portfolio value up 33% to £3.5 billion.
It has spent £757 million increasing its ownership of Westquay in Southampton, Brent Cross in London, Bullring and Grand Central in Birmingham and The Oracle in Reading since November 2024 at an average yield of 7.6%.
Assets under management are £4.4 billion and there was a net revaluation gain of £120 million.
Like-for-like net rental income was up 3% driven by what the REIT described as active asset management and record leasing activity.
The leasing came in at £51 million, up 18% like-for-like, reflecting "high demand for prime space and effective use of data-driven insights to optimise the mix of brands". That was 11% ahead of estimated rental value on a net effective basis with a pipeline of circa £20 million of leases.
European Public Real Estate Association earnings growth was 5% to £104 million with earnings per share at 20.7p up 4%, and EPRA net tangible assets per share up 6% to £3.94, reflecting positive income and capital returns, Hammerson said.
It swung back to an International Financial Reporting Standards profit of £232 million from a full-year 2024 loss of £526 million, driven by EPRA earnings and a net revaluation gain of £120 million. There was a total accounting return of 11%.
Hammerson flagged what it termed its sustainable and resilient balance sheet, at 39% loan to value. It declared a final dividend of 8.56p, up 6% and a full year dividend of 16.50p, up 6%.
For full-year 2026, its outlook is a total net rental income growth of 20% and EPRA earnings growth of 15%.
Wilkinson said the results benefited from the occupier side returning to strength. "Retail partners are really investing in physical stores and occupancy increased to 96%. We have shifted from a lease-up mindset to a rent up. Footfall is up and we are well ahead of the benchmarks and outperforming the market. We had record leasing across the portfolio too. It feels great coming into a retail business right now."
That, he said, was combining with an improving investment market for retail centres. The REIT will now be looking at potential acquisitions other than increasing its stake in its own centres.
"After many years of amazing transformation Hammerson is certainly looking at growing the platform and scaling up. We are targeting to undertake accretive acquisitions consistent with our strategy."
Importantly Wilkinson says Hammerson has access to both equity and debt markets.
"We demonstrated that with very successful equity and bond issues and can look at both to fund growth going forward."
Wilkinson said: "We are a retail-led business and we will remain so, but when you look at our estates we do have strategic lands integral to the centres where there is synergy to grow centres and there are others, such as Martineau in Birmingham, for instance that are not connected to the centre where we will look at controlling the masterplanning and look to maximise and recycle capital.
"Secondly we will look at accretive acquisitions of other centres that are of the right quality and fit for our strategy. We would be open to looking at mixed-use schemes where retail is a significant component."
In a statement with the results Wilkinson said: "We will maintain our focus on our ongoing active asset management and targeted leasing. This gives us high visibility of our income streams. We have a clear line of sight to growth in rental income, earnings and dividend in FY26 and beyond, with multiple paths for growth, further increasing our scale and value creation.”
Analysts were positive about the results. Panmure Liberum wrote in a note: "While the shares have had a strong run of late (now much closer to NAV at a circa 8% discount), we still anticipate shareholders will receive total returns exceeding cost of equity (circa 9%) over the next two years, justifying a stronger valuation."