SGS and Debenture Plc Intu - comment

Hammerson reported its FY21 numbers this morning, and their report highlights the continued improvement of occupancy rates and rent collections in the UK market. This continues the momentum we have seen across the wider retail property space. Specifically, Hammerson has seen yields showing signs of stabilising in the second half of the year. The decline in rental levels in the UK is slowing as the industry approach through values and investment markets gain more confidence in pricing income streams.

The second half of 2021 saw a noticeable improvement in investment sentiment and transaction activity. In the UK, shopping centre transaction volumes totalled £1.6 billion, compared to £0.3 billion in 2020, still significantly lower than the ten year average of c. £3 billion, but higher than the five year average of £1.2 billion (Source: C&W).

This all confirms our long thesis in SGS and Debentures, with occupancy rates and rental levels improving, which will, in turn, tighten yields and increase overall valuations.