By the time David Atkins leaves Hammerson, he will depart having either rescued the business or inadvertently steered it towards the same fate that befell its collapsed competitor intu.
Atkins is confident, however, that plans to raise some £794m in net proceeds from both a rights issue and a sale of its 50% stake in VIA Outlets will reduce its £3bn debt pile and safeguard the landlord’s future.
The hope is that these transactions, both of which have been proposed with significant discounts, will boost its negotiating position with buyers on future disposals.
Under his watch, the landlord has also devised a new leasing structure that includes rebasing rents at more affordable levels, replacing rent reviews with indexation, and more flexible leases.
The REIT aims to transfer around 25% of leases to the new model by the end of 2021, with the remainder over the following two years.
These are likely to mark his final moves as chief executive before he exits by next spring, at the latest. But Atkins is not feeling sad about bowing out on these.
“I may not be able to see all these things through, but I feel I am leaving the company in a position where the new chief executive can really look forward to the future with confidence,” Atkins tells EG.
“This a really unprecedented and challenging market. We were on track with our strategy pre-Covid, but it was very clear [as] we went into the pandemic that we needed to do something significant to ensure the business has a strong future.”
Incoming chairman Rob Noel has been leading the search for Atkins’ successor since the middle of last month, with the aim of concluding this by early Q4 this year.
As for Atkins, it is likely he will stay in the commercial property arena.
“Whatever you might say about Hammerson, we’ve always challenged ourselves and tried to be dynamic in what we do, and I hope my successor continues to challenge the business in the way I have,” says Atkins. “So I wish them every luck going forwards.”
Atkins has led the business through an unprecedented and rocky period. But there are moments that he will look back on with pride, especially when Hammerson became the first property company globally to set itself a net-carbon positive target.
“As the first property company globally to launch such an initiative, our Net Positive campaign is something I am enormously proud of,” says Atkins.
“Overall, we have modernised the business into a progressive, forward-thinking business. When I think of the days [in which] I arrived, it was in a very different shape and had a different approach. But I am handing it over to my successor in good shape.”
Part of the strategy that Atkins will be leaving Hammerson with involves a commitment to exiting the retail park sector, which it has upheld following the collapse of its £400m portfolio sale to Orion’s European Real Estate Fund V.
While it could be argued that retail parks have been performing significantly better than shopping centres during the crisis, Atkins says flagships remain at the core of Hammerson’s focus.
“Any decisions you make on assets should not be based on just three or four months’ trading,” he says. “Property is a long-term business, and we have set out what we intend to become: a much more UK- and Ireland-focused business, focusing on our flagships and the City Quarters strategy.”
That said, Hammerson is “not in any mad hurry” to sell its retail parks.
“The recapitalisation means we can have a much more orderly disposal programme, which [may involve] individual assets,” says Atkins. “On that basis we should be in a stronger negotiating position with any buyers as well.”
In the meantime, the landlord’s new approach to leasing, which has not been reflected in its June valuations, will “ensure shopping centres have a very positive future”.
“Stores historically have not been properly valued by the leasing approach,” adds Mark Bourgeois, managing director of the UK and Ireland.
“This new approach will enable a more collaborative relationship with retailers and establish the true value of a store that works for both parties.”
Atkins also believes the market has made its way through the worst of the valuation falls. By his estimation, it will reach the bottom at “some point in 2021”.
He says: “I don’t have a view on exactly how far they’ll go, but my sense – based on the economy, Brexit, Covid and a whole host of [factors] – is that we are certainly through the worst.”
See also: The brutal reality of being a CEO in turbulent times
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