As well as Dundrum, the company owns stakes in Pavilions in Swords, the Ilac in Dublin, and Kildare Village
Hammerson, owner of many of the UK and Ireland's biggest shopping centres, plans to convert some of those assets for housing, hotels and workspaces in a sign it sees further long-term disruption to the retail sector.
The commercial property group operates in seven different countries, with a number of flagship retail centres including the Bullring in Birmingham.
In Ireland, the company co-owns Dundrum Town Centre with German insurer Allianz. The group also owns half of the Pavilions shopping centre in Swords, the Ilac Centre in Dublin city centre and 40pc of the Kildare Village premium outlet mall. It has plans to build residential units in Dublin city centre and Dundrum.
In its half-year report yesterday the company said it has “some of the best assets in prime urban cities”, however, the profitability of the properties has been impacted by Covid-19.
“In the medium to long-term, there are more capital-intensive opportunities to repurpose part of our assets for alternative uses such as residential, hotel or workspace,” the company said. The biggest opportunity in this regard is in department store space, where the group currently has over 800,000 sq ft of void space or short-term leases, Hammerson said.
Speaking on an analyst call, Rita-Rose Gagne, Hammerson chief executive, said the company will “maintain a retail amenity core, but evolve the mix”.
“We have development opportunities, both on the existing sites and in the adjacent land bank we own. The most appealing and scalable is residential, but other sectors will be appropriate for specific assets,” she added.
In its half year report Hammerson said rent collection rates have continued to improve.
The company reported net rental income of £87.2m for the first six months of 2021, with collection rising to 71pc for the period.
Hammerson has received 65pc of rent for quarter three this year. Across the group, 90pc of billable rents have been collected for last year.
In Ireland, the group has collected 83pc of rent in respect of 2020. For the first half of this year, rent collection rates here are at 65pc.
The company said it has seen an “encouraging” pick up in leasing in the first half of the year. Leasing volumes at its flagships totalled £9.8m in the first half of this year, 123pc higher than the same period in 2020, and 17pc higher than the first half of 2019. The company said there is a “marked difference” in the underlying strength of the leasing demand across the group, with France and Ireland continuing to outperform the UK.
Estimated rental value (ERV) has fallen by 29pc in the UK, 4pc in France and 14pc in Ireland relative to their peak levels in December 2017 for UK and France, and December 2018 for Ireland. The company expects UK rents to stabilise when ERV levels are approximately 35pc below their peak, with France and Ireland reporting “lower reductions”.
Hammerson provided rent waivers for lockdown periods during 2020 and 2021 totalling £41m. Last month the listed company said it does not expect to offer rent cuts or rent holidays to retailers in the future. The company went on to warn that “all avenues to collect rents due are being pursued”.