Portfolios marked down at intu and Hammerson
As leading REITs report their half-year results shopping centre valuations are under growing pressure. Intu reported its portfolio valuation had fallen to £8.375bn as at 30 June 2019, a like-for-like reduction of 9.6% from £9.167bn a year previously. Valuers reported a 23bps outward yield shift reflecting weakening investor sentiment coupled with a 4.1% fall in ERVs reflecting the higher level of administrations and CVAs.
Hammerson reported a 9.1% fall in value of its flagship UK shopping centres, which the company attributed to “continuing market uncertainty and a slowdown in leasing.” However Hammerson’s resilient outlets business continued to grow, which meant its overall valuation deficit was lower.
Both companies unveiled turnaround strategies that involved disposing of assets to repay debt and bolster the balance sheet as well as longer-term plans to broaden the mix of uses at their sites by developing surrounding land with residential and other uses.