Brent Cross takes a £1.4bn hit as Hammerson signals a go-slow

High Street closures and Brexit uncertainties mean that retail landlord Hammerson is getting cold feet over redevelopment schemes for its shopping centres around the capital. WALTER CRONXITE reports

Put on ice: Brent Cross won’t be getting its makeover any time soon

Hammerson has shelved its plans for the £1.4billion redevelopment of its Brent Cross shopping centre, and doesn’t seem in any great hurry to pursue the regeneration of Croydon town centre, including its own Centrale mall.

The multi-billion property company released its half-year report to the Stock Exchange yesterday, and made it plain that what one newspaper called “the nightmare climate engulfing UK retailers” is making it take a very long, hard look at how the business spends its development cash.

The headline news in the company’s trading statement was the shelving of the Brent Cross proposals. But a single line about its Croydon interests could signal more uncertainty for the redevelopment of Centrale and, on the other side of the High Street, the Whitgift Centre, a scheme which Hammerson has been discussing with “partners” Westfield since 2012.

Referring to the Croydon Partnership, Hammerson’s joint venture with Unibail-Rodamco-Westfield, in a statement issued to Inside Croydon, a spokeswoman said, “The partnership intends to serve notice on the local council to exercise CPO (compulsory purchase order) powers to assemble the remaining areas of the site not currently owned by the partnership.

“The retail and leisure-led scheme will establish Croydon as a major lifestyle destination for south London and include up to 1,000 new homes. The development will involve the refurbishment of the existing Centrale shopping centre and is part of wider large-scale regeneration already underway in the town.”

None of which is news and all of which was contained within the company’s half-year report.

But the spokeswoman’s statement omitted another telling sentence that is also in the Hammerson half-year report about Croydon.

That sentence says, “There remain a number of planning and land assembly stages for the project ahead of a start on site.”

It doesn’t take too much reading between the lines of this additional piece of commentary to suggest that the company is in no rush to fork out any development funds on speeding up the process.

Since the announcement, two months ago, that Hammerson and Westfield had – finally!! – managed to get the agreement of John Lewis to open a four-storey anchor store within the development and a renewed planning permission, the official line has been that on-site demolition work would begin in 2019, with a completion date of 2023.

Given the sentiments expressed in Hammerson’s final sentence of their Croydon report, even that timeline might look optimistic, on a project which was originally meant to have been completed in 2017.

Predictions in the financial press at the weekend that Hammerson might be seeking a buyer for their interest in the Croydon development – also valued at a total £1.4billion – have not been denied. Insiders suggest that at this stage, the only likely buyer of Hammerson’s stake would have to be Westfield, and they are unlikely to be overly generous in allowing their reluctant partners to cash-out at this stage.

The situation is even more bleak in north London, where Hammerson’s 1976 shopping centre, Brent Cross, has been awaiting a makeover for a decade.

But with retail chains such as Maplin and Toys’R’Us closing this year and the likes of House of Fraser seeking to slash their rental bills, landlords such as Hammerson have been hit hard. The HoF store in Centrale is one that has survived that company’s cull, which suggests that some kind of accommodation over rent may have been done there. Hammerson’s costs have also been rising due to rising business rates and national living wage increases.

Hammerson’s half-year results bore the scars of the retail turmoil with net rental income down 3per cent to £178.5million. Although the group’s portfolio of commercial properties is still 97.2per cent occupied, tenants going into receivership or seeking voluntary arrangements to reduce their rents have cut Hammerson profits by £2.1million in the first half and will cost £5.8million over the year as a whole.

Hammerson’s David Atkins: see that blank space to his left? Could that be the company spending plans for Croydon…

Hammerson chief executive David Atkins said of the Brent Cross delays: “We think in these turbulent retail times and these question marks around the economy that we just pause for now…

“It is one of the best-loved shopping centres in the UK and we will continue to support it but right now conditions are not optimal for commencing such a major capital commitment. We’ll keep that under review as we go forward.

“I don’t know what the next six to 12 months is going to hold, whether it is the economy, the retailer landscape, Brexit, whatever, any more than you do so it would be wrong for me to give any firm guide.”

And those sentiments surely apply south of the river, to Hammersfield in Croydon, as they do north of the Thames at Brent Cross.

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3 Responses to Brent Cross takes a £1.4bn hit as Hammerson signals a go-slow

  1. derekthrower says:

    Further bear in mind that John Lewis had agreed to anchor Brent Cross in a scheme which was a long way further down the road than the Croydon miasma.
    Seems like the agreement with John Lewis cannot be particularly forceful if such commitments can be rapidly reneged upon. Looking like the money is drying up and some of the developers are trying to parcel up their portfolios to sell on and create liquidity. At the moment completion date looks like being closer to the year 2525 rather than 2025.

  2. Wow London says:

    Good article, although i dont see how paying the living wage has that much of a impact. Their direct headcount is only 550 , doubt any of them are on minimum wage and assuming all the cleaners and security are subcontracted, they don’t actually need that many per centre so the increase of paying the living wage must be tiny

    • That’s based on their own analysis and report on their own figures, rather than assumptions. The loss of rental income is undoubtedly a bigger impact.

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