Hammerson warns of retail relapse

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The owner of the Bullring and Brent Cross shopping centres saw 2010 profits rose by 11 per cent

The owner of the Bullring and Brent Cross shopping centres has revealed a recovering UK retail market helped 2010 profits rise by 11%, but it cautioned over the impact of Government austerity cuts.

Hammerson said the increase in VAT and actions to slash public spending could see some embattled retailers fall behind with rent repayments as it signalled the threat of a potential relapse after the sector’s recovery last year.

The group, which also owns Reading’s Oracle and Cabot Circus in Bristol, said 2010 was a turnaround for many retailers as trading conditions improved and administrations declined.

Its full-year results revealed underlying profits of £144.5 million in 2010, up from £130 million in 2009.

Retail vacancies fell as the recession saw many new developments cancelled or put on hold, which helped overall occupancy levels rise to 97.3%.

Hammerson said: “The trading environment has continued to improve during 2010, and the rate at which retail companies in the UK are going into administration has fallen.

“However the effects of increased taxation and restrictions on government spending may mean that some tenants, principally in the UK retail sector, face difficult operating conditions and there is a risk that they will be unable to pay their rents.”

It said it should be protected from widespread rental defaults thanks to the scale and geographical spread of its tenants.

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