Hammerson plc Signals Reset With Earnings Momentum

Hammerson plc R.E.I.T. ((GB:HMSO)) has held its Q4 earnings call. Read on for the main highlights of the call.

Hammerson’s latest earnings call struck an upbeat tone, with management framing 2025 as a decisive reset after years of restructuring. Strong net rental income growth, a return to positive IFRS profit and sizeable portfolio revaluation underpinned confidence, even as executives acknowledged transaction-driven boosts, higher costs and macro risks that could moderate the pace of progress.

Net Rental Income Surges on Deals and Like-for-Like Growth

Net rental income climbed 23% year-on-year to £180m, powered by the consolidation of joint ventures and solid 3% like-for-like rental growth in line with prior guidance. Management argued that the combination of scale from acquisitions and underlying rental momentum validates the strategy of doubling down on core flagship destinations.

Earnings and Profitability Mark a Turnaround

EPRA earnings rose 5% to £104m, coming in slightly ahead of market expectations and signalling improved profitability. IFRS profit reached £232m, marking Hammerson’s first full-year positive IFRS result since 2017 and reinforcing the sense that the business has moved beyond its restructuring phase.

Steady Dividend Growth Underscores Confidence

Dividends increased 6% year-on-year while the payout ratio was held at 80%–85%, which management presented as evidence of confidence in recurring cash flows. The board reiterated its commitment to a disciplined yet shareholder-friendly policy, balancing income returns against the need to fund selective growth and repositioning.

Portfolio Revaluation Drives NTA and Returns Higher

The portfolio’s valuation jumped 33% to just above £3.5bn, helping net tangible assets rise 6% to £3.94 per share. Management highlighted a total accounting and property return in the 10%–11% range, split between roughly 4% capital return and about 6% income, arguing this demonstrates the resilience and quality of the core assets.

Occupancy and Footfall Showcase Operational Momentum

Occupancy reached 96%, with six of the top 10 destinations exceeding 98%, reflecting strong leasing demand. Footfall increased by 3m to 170m visitors and retailer sales surpassed £3bn, while “new-for-old” repurposing initiatives lifted sales densities by about 40% versus pre-COVID levels.

Record Leasing and Upside to Rental Values

Hammerson signed a record £50m of new leasing in the year, equating to about £260m of additional rent to first break and pointing to embedded income growth. The company entered early 2026 with around £20m of leasing already in the pipeline and reported like-for-like estimated rental value growth of 3% in 2025, with management expecting more to come.

JV Buyouts Accelerate Earnings and Scale

The group invested roughly £760m over 15 months to buy out four joint-venture partners at yields above 7.5%, adding scale without expanding headcount. Management stressed that these deals have been earnings-accretive and boosted rental-driven EBITDA, consolidating control over key assets at attractive returns.

Balance Sheet and Liquidity Remain Solid

Leverage stood at 39% loan-to-value, with net debt-to-EBITDA around 8.1x on an annualised basis including acquisitions, which management described as comfortable for the current stage of the cycle. Liquidity was about £1bn and £104m of debt has been repaid since year-end, contributing to improved credit ratings and giving the group flexibility for selective investment.

Operational Wins at Flagship Assets Confirm Strategy

Specific asset-level wins underlined the operating momentum, including a 50% spike in opening-day footfall and 25% higher car park usage at Cabot Circus following the M&S opening. At The Oracle, second-half footfall rose 9% and scheme net rental income grew 10%, while Les 3 Fontaines reached 90% occupancy with an extension largely pre-let to major anchors.

Growth Quality Questioned as Transactions Drive Uplift

Analysts probed how much of the earnings improvement stemmed from disposals and JV buyouts rather than pure organic growth, noting that rebased like-for-like earnings looked weaker on an adjusted basis. Management accepted that transactions were a meaningful driver in 2025 but argued they are disciplined and repeatable within the current opportunity set.

Equity Issuance Leaves a Mark on EPS

The issue of 48m new shares and the suspension of the share buyback weighed on earnings per share, despite the underlying earnings growth. Management flagged that while EPRA earnings should grow around 15% in 2026, EPS is only expected to rise about 10% as the dilutive effect from last year’s capital raise continues to wash through.

Higher Costs and Finance Charges Temper the Upside

Net administration costs increased, reflecting both inflationary pressures and the loss of fee income after bringing joint ventures fully on balance sheet. Net finance costs rose by £7m, driven mainly by a £10m drop in interest receivable after cash was redeployed into acquisitions, partially offsetting the operating gains.

Macro and Cost-Efficiency Risks Remain in Focus

Management highlighted external headwinds, including soft consumer demand in the U.K. and France and near-zero indexation in France for 2026, which could restrain rental growth. Although the EPRA cost ratio improved to 35.9%, the company only expects to reach below 30% by 2027, signalling that further efficiency gains are still required.

Dependence on Deals and Repositioning Execution

Some investors voiced concern that sustaining the current earnings trajectory may rely on further accretive acquisitions and successful asset repositionings, which carry execution risk and timing lags. Management contended that the existing portfolio already contains significant embedded upside, but acknowledged that capital recycling and targeted deals will remain part of the growth toolkit.

Guidance Points to Strong 2026 and Beyond

For 2026, Hammerson expects around 20% net rental income growth, combining the full-year impact of JV acquisitions with 4%–5% like-for-like rental uplift, while EPRA earnings are guided to rise roughly 15% to about £120m and EPS by around 10%. The group plans to keep net finance costs near £60m, hold flagship gross-to-net at roughly 80%, lower the EPRA cost ratio by 3–4 percentage points in both 2026 and 2027 and fund roughly £64m of annual CapEx from free cash flow after dividends from 2027, supporting a medium-term EPS CAGR target of 8%–10% off the rebased 2024 base.

Hammerson’s call painted a picture of a retail landlord that has largely completed its turnaround and is now pivoting back to growth, backed by healthier earnings, rising asset values and strong operational metrics. While some of the recent uplift is transaction-led and macro headwinds persist, the balance of evidence and guidance suggests a cautiously optimistic outlook for investors seeking exposure to European retail real estate.