High Street Shopping Crisis Impacts Major Property Stocks

February 28, 2020

It’s not just the major high street store brands that are facing financial troubles within the retail sector, landlords are having similar problems. This has been particularly apparent throughout 2020 for two of the main out of town landlords, Intu and Hammerson.

Financial Difficulties Experienced By Intu And Hammerson In 2020

Hammerson and Intu are two of the largest retail landlords in the UK, and up to £573mn has been wiped off their share values already this year.

They’re not only facing store demands for lower rents but have also experienced short selling in the markets.

The loss of several major high street brands and announcements of successful negotiations for lowered rents for other brands in company voluntary arrangements (CVA) has increased demands for rent reductions right across the board.

For example, popular fashion retailer Next stated in July 2019 that from a total of 37 recent lease renewals, it managed to reduce rents by 28% on average.

This loss of income-generating profits has caused many investors to sell up, while others have been short-selling in order to make profits from their retail landlord shares.

Short Selling

A recent article in The Estates Gazette pointed out that Intu and Hammerson are the major stocks being short sold by investors.

This has resulted in the value of Intu being slashed by more than 50% and Hammerson dropping by around 25% in 2020 alone.

Hammerson announced the sale of seven retail parks on Friday, 21 February, and seems to be beating a hasty retreat from this sector. While reports also suggest that Intu is currently looking to borrow at least £1bn.

Nicholas Hyett, from Hargreaves Lansdown, commented:

Since Christmas, the share price has really come off of Hammerson’s value.”

He added that this has been gradually eroded over the past five years, but said

. . . the recent fall possibly has to do with the fact that a lot of its leases have come up for renewal and High Street stores are re-negotiating these aggressively“.

Both Intu and Hammerson are due to publish full-year accounts by the beginning of March, and analysts are keen to discover more about the exact financial status of both companies.