Hammerson Memo 121020
- Understand the extent of potential downside risk to Hammerson’s H1 20 proportionally consolidated investment and development property valuation of c. £7.7bn given our projected net rental income (NRI) and unleveraged FCF
- Understand Hammerson’s unencumbered asset ratio covenant in its Private Placement Notes (PPNs) and its secured gearing covenant in its Senior Unsecured Notes (SUNs) and senior unsecured RCF, and how these covenants interact (together with the rights issue and VIA Outlets disposal) to impact: (1) the extent to which SUNs could be layered; and (2) freedom to sell unencumbered assets and liquidity
- Financial projections (including of liquidity), valuation and sensitivities
- Valuations of potential next disposals after VIA Outlets – Retail Parks and Value Retail
- Will Hammerson still breach its amended unencumbered asset ratio covenant in its PPNs and to what extent would those PPNs be able to take security in return for a covenant waiver?
- To what extent will the PPNs be redeemed with the rights issue and VIA Outlets proceeds?
- To what extent does the unencumbered asset ratio covenant constrain further property disposals and to what extent are further property disposals needed to manage liquidity through debt maturities?
- Given the extent of downside risk to Hammerson’s H1 20 proportionally consolidated investment and development property valuation, to what extent could this further strain even the unencumbered asset ratio in the SUNs and RCF?
- How well covered are Hammerson’s SUNs, even taking into account further potential downside risk to property valuation?
- What impact will Hammerson’s proposed new UK leasing model have on its Net Rental Income?
- What do we estimate the prospective rental yield to have been on the failed sale of the seven retail park portfolio to Orion earlier this year at c. £395m and what does this mean for yields moving forward for potential property valuations?
- View, Variant Perception & Recommendations
- Business Overview & Analysis
- Historic Financial Analysis
- Financial Model – Projections, Valuation & Sensitivity
Appendix – UK Retail Parks – Valuation