Hammerson PLC (LON:HMSO) has been upgraded to ‘hold’ from ‘sell’ by analysts at Liberum, who said the company’s £552mln rights issue announced earlier this month had removed the risk of a near-term covenant breach by the shopping centre owner.
“The facts have changed, so we change our view. The rights issue is fully underwritten, so Hammerson will get its cash”, the broker said in a note on Wednesday, in which it also hiked its target price for the company to 50p from 30p.
However, Liberum continued to expects UK shopping centre values to “fall fastest” within the company’s portfolio, predicting another 15% decline by the end of the year.
The broker also said following Hammerson’s planned sale of its stake in European joint venture Via Outlets for £274mln, they did not expect any more disposals in the second half of the year.
Hammerson, which owns the Bullring and Brent Cross shopping, is undertaking the rights issue, which will see the shares priced at 15p, a near 95% discount to their market price the day before the announcement, in order to help cut its net debt £2.2bn and lower the ratio of debt to loans to 41.7%.
The company unveiled the rescue refinancing alongside a £1.1bn loss for the half-year to end-June, 2020, as coronavirus lockdown measures collapsed shopper foot traffic at its shopping centres, causing a resultant knock-on effect of resident retailers and their ability to pay rent to the company.
Hammerson shares were down 1.2% at 48.4p in late-morning trading.