Hammerson (LON:HMSO) said its increased 2026 earnings guidance reflects stronger leasing performance, higher occupancy and turnover rent contributions, alongside a small number of first-half one-off items, as the shopping-center owner also outlined its acquisition of a 50% interest in Manchester Arndale.
During the company’s half-year results question-and-answer call, Chief Executive Officer Rob Wilkinson said the Arndale transaction followed an earlier sale process that did not proceed because Hammerson was not comfortable with the timetable for physical due diligence.
“It was nothing to do with the asset at all,” Wilkinson said of the earlier decision not to proceed. “It was simply that the process was not one that we were comfortable participating in.”
Arndale plans and partnership with M&G
Hammerson will jointly own and manage Arndale with M&G. Wilkinson said the companies were aligned on the center’s business plan and strategy, describing M&G as a long-term investor.
He said the property does not require urgent capital expenditure and that the building fabric is in good condition. Planned spending is expected to be primarily accretive, focused on leasing initiatives and improving the tenant mix. Other work may include public-realm improvements, entrances, streetscape and wayfinding, as well as investment in the upper end of the food court.
Wilkinson characterized the work as largely ordinary-course capital expenditure comparable with spending across Hammerson’s wider portfolio.
The transaction was accompanied by an equity raising. Wilkinson said the financing would reduce leverage metrics while also providing flexibility for potential future acquisitions. He estimated that Hammerson would have approximately £200 million of additional capacity while remaining within credit metrics management considers comfortable.
Guidance raised on leasing and occupancy
Chief Financial Officer Himanshu Raja said the company raised its underlying earnings guidance for 2026 to £125 million from £120 million. The revised outlook includes more than £2 million from the settlement of longstanding rate rebates during the first half.
However, Raja said the main driver was underlying operational performance, including leasing activity that is expected to increase occupancy in the second half. Higher occupancy lowers void costs and increases service-charge income, while store openings during the year are expected to contribute to Hammerson’s share of turnover rent.
Including a £7 million contribution from the Arndale acquisition, Hammerson’s guidance is £132 million, which Raja said represents a 27% increase year over year.
Management also reiterated medium-term targets for earnings per share and dividends per share to grow at a compound annual rate of 6% to 8%, based on 2025 as the starting point. The company defines its medium term as five years and continues to target a total accounting return of about 10%.
Raja said Hammerson sees potential for like-for-like growth of roughly 4% to 5% in 2027. He cited repositioning projects expected to come on stream, including further work at The Oracle, Quakers Friars at Cabot Circus, and the opening of a surgery extension. From 2028 onward, the company expects inflation-plus growth through continued rental growth.
He added that revenue growth should improve the group’s cost ratio through operational gearing, noting that Hammerson does not expect to add incremental resources as it takes on co-management of Arndale.
Portfolio performance and valuation outlook
On U.K. like-for-like net rental income, Raja said Westquay’s year-over-year comparison was affected by a surrender received in the prior year that did not repeat. Elsewhere, he said performance was supported by repositioning activity at Bullring, Cabot Circus and The Oracle.
Raja highlighted continuing rental growth at Bullring, including on the East Upper Mall, where he said tenant repositioning, including the arrival of New Balance, had driven an uplift.
Wilkinson said half-year property valuations were flat. He attributed this in part to uncertainty related to the Middle East, which he said had prevented the yield compression he had anticipated at the start of the year.
He said Hammerson has not seen yield decompression and has observed renewed market activity over the past six to eight weeks. Wilkinson said he believes this could result in yield compression in the second half. He also pointed to leasing spreads 9% above estimated rental values during the first half, which he expects to be reflected in valuations over time.
Debt refinancing
Hammerson’s eurobond matures in June 2027, Raja said. The company has pre-funded part of the refinancing requirement and intends to return to debt markets for the balance at what it considers an appropriate time.
Raja said Hammerson’s June debt issuance was completed at a 3.875% rate. The company has an EMTN program in place that provides flexibility to access either sterling or euro markets, he said.
About Hammerson (LON:HMSO)
Hammerson is a cities business. An owner, operator and developer of prime urban real estate, with a portfolio value of £4.7billion (as at 30 June 2023), in some of the fastest growing cities in the UK, Ireland and France. Our portfolio and adjacent lands leverage our experience and capabilities to create and manage exceptional city centre destinations with the opportunity to drive value and reshape entire neighbourhoods. Our assets are high profile and play an important role in our communities, welcoming c.
