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Consumer spending helps Hammerson

Growing consumer confidence is boosting tenant demands for space in Hammerson's retail portfolio.
July 27, 2015

Increasing consumer confidence at retail landlord Hammerson (HMSO) has been apparent in the first six months of this year, as retailers moved to expand their operations. Within its 11 major UK shopping centres, a total of 74 leases were signed during the period on 24,000 square metres of space, generating £5.4m of annual rental income. On a like-for-like basis, group net rental income grew by 2.1 per cent, and last year's decline in footfall was reversed. Headline profits were lower, reflecting a smaller revaluation gain on the portfolio of £163m, against £225m a year earlier.

IC TIP: Buy at 645.5p

For principal leases in UK shopping centres, rents secured were 2 per cent above last December's estimated rental value, while occupancy levels remained high at 97.8 per cent. In fact, there were only nine units affected by tenants entering administration, equivalent to just 0.2 per cent of total rental income.

Trading in the group's French portfolio of 11 shopping centres and a retail park was more of a challenge, reflecting tougher domestic economic conditions. Tenant rotation helped to lift like-for-like rental income by 2.3 per cent, but retail sales and footfall were both down slightly from the previous year.

Analysts at UBS forecast adjusted net asset value by December of 692p (from 638p in 2014).

HAMMERSON (HMSO)
ORD PRICE:645.5pMARKET VALUE:£5.06bn
TOUCH:645-645.5p12-MONTH HIGH:708pLOW: 537p
DIVIDEND YIELD:3.3%DEVELOPMENT PROP:£212m
DISCOUNT TO NAV:2%
INVESTMENT PROP:£7.34bn*NET DEBT:42%

Half-year to 30 JunNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201460736350.88.8
201566232941.69.5
% change+9-9-18+8

Ex-div: 20 Aug

Payment: 1 Oct

*Includes £2.4bn investment in joint ventures and £691m in associates