Hammerson will hold off from the construction of its £150 million Watermark WestQuay scheme in Southampton until “economic conditions improve”, it has confirmed.
The developer, which won outline planning consent for the retail quarter last month, said it wanted to obtain detailed approval and wait for an improvement in the economy before it started work on the scheme.
It has already brought Arup on the project as structural consultant and Cyril Sweett as quantity surveyors.
But a Hammerson spokeswoman said: “We still need to get detailed planning permission all signed off before we go any where. So there is no timeline [for procuring the main contractor].”
Last August the group revealed it was unlikely to start any major projects until at least mid-2009 after posting significant losses.
An update in its interim management statement for the four months to 30 April 2009 revealed: “Hammerson continues to progress planning and design for the [Watermark] scheme, but it is unlikely to commence works on site before economic conditions improve.”
Hammerson said it would be keeping a close eye on “the viability in construction costs” while it waits for the economy to become more favourable.
The developer has several other projects in the pipeline – including the £700 million Bishop’s Place in east London, and Eastgate Quarters, worth a similar value, in Leeds – but it refused to comment on which might get off the ground first.
The mixed-use Watermark scheme will include up to 24,000 sq m of retail space, a 150-bed hotel, a residential building with up to 240 apartments, and other leisure facilities on a 4 ha brownfield site adjacent to its existing WestQuay Shopping Centre.
Hammerson is now only on the ground at one major site in the UK – its Union Square scheme in Aberdeen, which is being built by Miller Construction. The development, which is 51 per cent let since anchor tenant Marks & Spencer signed this month, is due to complete in the autumn.
Rights issue improves Hammerson finances
Hammerson’s successful £584 million rights issue has strengthened the company’s financial position “substantially”, it told its shareholders last week.
In an interim management statement, the developer said the proceeds of the rights issue had been used to reduce borrowings under its existing credit facilities.
At 31 March, the group’s borrowings were £3.1 billion, with a net debt of £2.7 billion. This compares to a net debt of £3.3 billion at 31 December.
Chairman John Nelson said: “Although market conditions remain difficult, with property values having shown further weakness in the first quarter, the fundamentals of Hammerson’s business remain sound and, following the rights issue, the company’s financial condition has been strengthened substantially.”
Hammerson said it was still also negotiating the sale “of certain properties”, as it indicated during last month’s rights issue, but did not disclose which it might lose from its portfolio.