Hammerson Share Discussion Threads

[williamcooper104] 18/2/2021 15:26

I think the vaccine roll out in U.K./US is going very well - having just had my Pfizer jab International tourism likely to not recover as quickly but the domestic economy should in the summer - so long as we don't get a home grown South African/Kent hybrid variant - which we might if we unlock too early

[williamcooper104] 18/2/2021 14:29

Yep - wouldn't surprise me Long dated puts would be great but will be super expensive

[williamcooper104] 18/2/2021 14:01

It shouldn't do SHB is less risky than HMSO but both are interesting I never bought SHB before covid as they've always been nose bleed expensive

[williamcooper104] 18/2/2021 14:00

No change really - it might just survive re-opening - but longer term hard to see it lasting without new equity/new capital structure Mooky will do well out of whatever - current shareholders maybe not Better to play the recovery trade with something that actually has a balance sheet

[williamcooper104] 18/2/2021 13:35

Remembering the last time Covent Garden and the Trafford centre traded 10 and 14 years ago - C Garden has gone up about 3x and Trafford fallen by 60 percent Tells the story of prime shops/districts v prime shopping centres

[williamcooper104] 18/2/2021 13:31

And CapCo likely to buy/merge with SHB which will then create a huge land holding from Covent Garden to Regent's street - then just need Soho Estates to roll in and the jigsaw is complete SHB more likely to benefit from the merger/acquisition premium than CapCo (IMO)Note this has been talked about for years, but CapCo have bought into SHB so it might actually happen in the next few years

[williamcooper104] 18/2/2021 13:28

SHB and CapCo are worth checking out too - shops rather than shopping centres have way less operating costs and both own super prime assets/locations

[williamcooper104] 16/2/2021 17:10

Uniball unlikely at moment as have own problems to sort outPE is a possibility; there's never been so much PE money raised for commercial real estate The parties who got close to buying Trafford were all PE So it's not impossible that there's a bid at somewhere between current share price and NAV Brookfield (via one of their funds) have bought into BL and KKR bought into GPOR, so far we haven't seen any material purchases into HMSO

[the original goldbug] 16/2/2021 17:00

Is it plausible or more a case of wishful thinking that either the likes of a Unibail or PE could make a move on them to avoid the ‘zombie’ scenario? (Which our friend WC has built quite a compelling case for...)

[williamcooper104] 16/2/2021 15:53

There's a lot of that happening Land secs O2 centre on the Finchley Road going for 2k flats Westfield turning 200k of retail into flexible office Converting retail to resi works in London/south east - it's harder unless you can get a lot more built space in less expensive residential areas - hence why regional/secondary assets are selling for literally next to nothing

[flyfisher] 16/2/2021 13:51

I read recently that Brent cross retail park had been sold to the council, but it didn't give financial details.
Also that leicester highcross debenhams had received planning permission to be converted into 335 flats.

Has anyone heard anything further on these.

And thanks to William for your sector insight.

[williamcooper104] 16/2/2021 11:59

You cannot use the undrawn revolver for funding much capex but of course if you draw it down to refinance an existing bond then that shouldn't put pressure on the covenants as net debt won't have changed Hence why the 2022/23 euro bonds aren't distressed But equally while that shows that the show is not going to fall over quickly it also shows that post bond refinance there's very little liquidity left in the the business

[williamcooper104] 16/2/2021 11:50

I wondered if the Eurobonds were convertibles But then they are euros, it was issued in 2014 at the height of the market for retail property and HMSO would have then had a very strong investment grade balance sheet - Uniball used to issue bonds at those yields

[gooseman1979] 16/2/2021 11:44

William,

Thanks - great insights. Are you holding this? If I recall correctly you had a position in late 2020

[the original goldbug] 16/2/2021 11:38

I was just looking at all the bonds beyond the Eurobonds. I was surprised that the Eurobonds coupon was 300-400 bps less than the longer dates sterling bonds which interestingly are trading at a 10% premium to par.

So what could be the equity upside here if NAV right downs are on the rosy side?

We are about 2.7bn EV here, so how does this play out for equity even under the zombie scenario?

[williamcooper104] 16/2/2021 11:38

Looks like the 2022 and 2023 bonds are trading close to par - in the high 90s The coupons on these bonds are v low at 1.75 and 2 percent The 2026 bond yields over 5 percent So looking like market is pricing a refinance of these bonds, but interest cost will be a lot higher Notable that the cost of debt is 3 percent (that includes cheap euorbond and v cheap government funding) - can see that pushing towards 5 So again there's a lot of financial stress/zombie risk but this isn't an intu

[williamcooper104] 16/2/2021 11:28

And of course a breach of covenants doesn't necessarily mean enforcement time It's likely that covenants will be renegotiated but not in a shareholder friendly way - would point towards this being a zombie company run to reduce lenders risk

[williamcooper104] 16/2/2021 11:25

Retail warehouses haven't fallen in value since June 2020 though, and may have actually risen a little Bicester is a unique asset so while its actual market value is clearly way down that probably won't be reflected in the red book - there are no comps so we will just guess it valuation So it's not certain that HMSO will breach covenants - but equally it's clear that there's very little comfort room