Top City investors throw weight behind Hammerson in stand-off with Lighthouse

A pair of leading City institutions have thrown their weight behind Britain’s biggest shopping centre owner amid demands from its biggest shareholder to speed up asset sales and resume dividend payments.

Sky News can reveal Legal & General Investment Management (LGIM) and Schroders, which between them own more than 6% of Hammerson, are backing its board’s strategy in the face of a proxy battle.

Hammerson owns some of the UK’s landmark retail destinations, including Brent Cross in northwest London.

It is chaired by Rob Noel, the former Land Securities boss and one of Britain’s most experienced property figures.

Lighthouse, the investment vehicle of former Hammerson director Desmond de Beer, which holds nearly 23% of the company, has tabled resolutions to appoint two new board members because of its discontent over the company’s strategy.

Its campaign began to unravel on Friday, however, when APG, the second-largest investor with 20% of the stock, also opposed Lighthouse’s proposals.

In a statement issued to Sky News, a Schroders spokesperson said: “As a long-term active investor in Hammerson, our aim is to use our influence to engage constructively and thoughtfully with the companies in which we invest.

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“We support the board’s strategy of divestment and deleveraging, and believe the current board is well-positioned in regards to skills, experience and diversity.

“As such, we will not be supporting the shareholder resolutions proposed by Lighthouse Properties plc at the upcoming annual meeting.”

Meanwhile, an LGIM spokesperson said it remained “supportive of Hammerson’s board and the management team, and we agree with the decision to retain cash to further strengthen the balance sheet rather than paying a final dividend for 2022”.

“Our view is that the resolutions proposed would act to destabilise the board and disrupt the organisation.

“Long-term shareholder value creation should continue to be the priority for Hammerson, and at this point we believe the board composition as it stands is optimal to deliver this.”

Call for ‘disciplined management’

Moerus Capital Management and Stanlib, which collectively hold 2% of Hammerson’s shares, also oppose Lighthouse.

In a letter published in Hammerson’s annual report, Lighthouse had said it did “not have confidence in the Hammerson board as currently constituted, having regard to the operational and strategic weaknesses reflected in Hammerson”.

Mr de Beer, who quit the company’s board last October, expressed unhappiness at its record of reducing administration costs.

“Relative to the size of its managed portfolio, Hammerson’s administration costs have increased and objectively are high,” Lighthouse said.

“This is a matter Hammerson can rectify in the short term through disciplined management,” it added.

Lighthouse added that Hammerson, led by CEO Rita-Rose Gagne, had shifted its focus “away from its core proposition as a retail REIT [real estate investment trust]”.

“Despite owning world-class malls which continue to perform well, Hammerson trades at a discount to net asset value of over 50%,” it added.

It wants Hammerson to sell its stake in Value Retail, which operates the Bicester Village flagship retail destination.

Lighthouse said it would vote against the re-election of “at least” two of Hammerson’s non-executives at the AGM in early May, and has nominated Nick Hughes and Craig Tate as replacement directors.

‘Unnecessary, distracting… destructive’

“Lighthouse’s proposals are unnecessary, distracting and value destructive. It is the Board’s view that neither nominee has the experience or skills that will be additive to our board and it would not be beneficial to appoint them,” a Hammerson spokesman said.

“The board is confident that the strategy and leadership team is the right one and our performance clearly demonstrates strong strategic, operational and financial progress,” he added.

It is not the first time that Hammerson has faced unrest from activist investors.

In 2018, Elliott Advisers took a stake in the company and pushed for assets sales, before reaching a compromise deal over the prospective reshaping of its board.

Hammerson subsequently raised £550m in a rights issue as it contended with the impact of the pandemic, and also lost its chairman and chief executive in short order.

It has been engaged in a protracted programme of disposals which continued this week with the sale of a large Parisian shopping centre.

On Friday, shares in Hammerson were trading at around 25.9p, valuing the company at £1.27bn.

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