Commercial property business Hammerson has written down the value of its shopping centres and stores by nearly £2 billion as Covid-19 saw rental income suffer the biggest fall in the company’s history.
Bosses at the company, which owns Birmingham’s Bullring and London’s Brent Cross, said its properties were worth £6.34 billion at the end of 2020 compared with £8.33 billion a year earlier.
Net rental income in 2020 fell 48.9% to £157.6 million, with adjusted profits at the firm falling 82.9% to £36.5 million.
The UK was the worst affected, with flagship sites and retail parks suffering like-for-like declines of 51% and 42% respectively, compared to 18% falls in France and 30% drops in Ireland.
Drops in valuations were particularly hard for shopping centres – down 35.8% – and retail parks were off by 23.3%.
But the company’s discount outlet retail parks only fell 6.2%.
Commercial landlords are contemplating a difficult future with the shift to home-working and most companies expect staff to no longer commute five days a week, making city centres less attractive to tenants.
Rita-Rose Gagne, chief executive of Hammerson, said: “By any measure, 2020 was an unprecedented year with every business and household affected by Covid-19.
“As our results show, Hammerson was hit hard. The retail sector, already in the grip of major structural change, has been significantly impacted by the restrictions imposed to tackle the pandemic, and we’ve also seen an increasing number of retail failures.
“Combined, this has resulted in the largest fall in net rental income and UK asset values in the group’s history.”
She added she is hopeful for the future as lockdown restrictions ease and the vaccination rollout continues at pace.
She said: “As a business, Hammerson provides the places and social infrastructure where people want and need to be, and I am confident it will have a vital role in shaping neighbourhoods and communities in the future.”
The company will sell off more properties and confirmed it will end a joint venture on two shopping centres in France.