Comment: shopping centre boss's departure from Hammerson may lead to a rescue fundraiser
It’s bad form to speak ill of the departed, so I will say this: Hammerson’s David Atkins is a thoroughly nice bloke.
Professional, unassuming and far from the cocksure property type you usually see steering their expensively-filled bellies down the Croisette at the annual industry jamboree in Cannes.
But, oh, what a mess he’s made of Hammerson.
In the past two years, while the board has seen fit to pay him £2.6 million in salary and bonuses, he’s taken the share price from 540p to 78p. That’s an epic feat of value destruction.
Can he be blamed for the structural shift against the shopping centres he inherited when he became CEO a decade ago? No, but it’s down to him that Hammerson remains so exposed to it.
Back in 2012, it was his call to ditch the company’s London offices and become a specialist retail mall player, putting all shareholders’ chips on red. The roulette wheel spun, and it came out black.
Again, you can say he can’t be blamed. Investors at the time were calling on him to narrow the portfolio and he got a decent price, but look at the state of the company now. While diversified British Land today can point to a hoped-for pickup in the office market to offset the retail gloom, what hope is there for Hammerson, stuck in oversized malls at a time of unprecedented numbers of store collapses?
It wasn’t as it he didn’t get a second chance to right the wrong. In 2018, France’s Klepierre came in with a takeover bid at 635p.
For context, at the time, House of Fraser had just collapsed, Debenhams was on its knees. M&S, New Look and Mothercare were all eyeing store closures. The death of bricks ‘n’ mortar retail had long since become a stale topic for dinner parties in the shires.
But Atkins and his board rejected it.
His big idea was to double down on retail and merge with Lakeside owner Intu.
What a spectacular disaster that would have been, as Intu now heads for the knackers yard. It took angry shareholders put the kybosh on that Atkins project.
Yet somehow, Atkins managed to survive another two years.
Admittedly, he got the company’s debt down by £1 billion or so through disposals, but the value of the remaining shopping centres is on the floor.
His deal to sell £400 million of retail parks in February collapsed earlier this month as the market for retail deals slammed shut.
Valuations won’t be helped by a potential firesale of Intu’s assets when (if) conditions for transactions ever improve.
That, in turn will make it even more likely that Hammerson breaches its debt covenant test next month.
The covenant is based on the value of the group’s shopping centres, which has surely plummeted since covid. Analysts say even if the banks waive it this time, Hammerson will fail it in December.
Which brings us to the good news.
Atkins’ departure does at least clear the path for some sort of major equity fundraiser to boost Hammerson’s capital position.
I doubt shareholders would have stumped up without a significant change at the top, but now it’s happening. I’m not sure I’d put more money into retail even without Atkins at the helm, but some might.
Sorry, David, but leaving could be the best thing you’ve done for this business in years.
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