The Hammerson (LSE: HMSO) share price fell yesterday after it reported an operational and rent collection update. But it seems to be recovering today.
I recently commented on the commercial property landlord’s 2020 full-year results. The numbers were dismal and it emphasised the extent of the damage from the pandemic.
But I still believe the worst is over for the company and the Hammerson share price could rise from these levels. I’d buy the stock for its recovery potential this year.
The update
I think it’s worth looking at Hammerson’s operational and rent collection update in some detail.
The company has a number of shopping centres located across the UK. So on 12 April 2021, its flagship destinations across England and Wales reopened.
Hammerson has indicated that the initial recovery in England is “encouraging” and approximately 90% of tenants are currently able to trade. In terms of Scotland, around “30% of occupiers are currently trading ahead of the current anticipated reopening on 26 April”.
What I think is pleasing to see is that the UK’s footfall is competitive with pre-pandemic levels. This is perhaps an early sign of things to come if the lockdown restrictions continue to be eased.
In fact, Hammerson highlights that across a seven-day average, footfall at its key locations in the reopening week was “around four-fifths of that achieved in the same week in April 20219. This is an improvement of approaching 50% points on reopening in June 2020”.
I reckon it’s still early days, but these figures make me somewhat optimistic. I shouldn’t forget that shopping is a social activity and during the lockdowns there has been little chance to socialise. Also consumers now have the opportunity to spend some of the money saved during the pandemic.
The wider portfolio
Activity at Hammerson’s properties in France remains subdued though. Stringent restrictions are still in place there and a review is due on 3 May. The company doesn’t expect operational performance in France to improve until the second half of 2021.
It’s the same for Hammerson’s portfolio in Ireland. The Irish government has indicated a roadmap to reopening non-essential shops in early May. I guess I’ll have to watch this space.
Rent collection
I’m not going to beat around the bush and say the last year hasn’t been challenging for Hammerson. I still reckon it will be a rocky road for the commercial landlord. But for me, it’s encouraging that so far it has collected 40% of its Q2 2021 rent.
Some investors may think this figure is too small. But after last year, I think it’s a step in the right direction. The UK vaccine rollout has been successful and should continue. This means that the lockdown restrictions are likely to ease across all territories.
Risks
I reckon the Hammerson share price could recover in 2021. But this is highly dependent on the ongoing easing of government restrictions.
If there are any delays in the vaccine rollout or new coronavirus variants emerge then this is likely to impact commercial property and thereby the shares.
Yet I feel things look encouraging in the UK so far. And I’d use this opportunity to snap up some Hammerson shares.