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Despite the dour sentiment towards UK commercial property since the start of the year, Hammerson was able to achieve impressive growth during the first half of 2007. But trading is set to get tougher as 2007 progresses.
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Indeed, UK retailers, which occupy more than half of Hammerson’s properties, have been asking landlords for more incentives due to tougher trading conditions. That said, the high quality of Hammerson’s retail parks and shopping centres, such as the Bullring in Birmingham, should help it to continue to draw in tenants. The reit also injected a note of caution into its interim results in response to the recent turbulence in the financial markets, warning that if the weakness continues it may affect demand for City office space. However, conditions are currently still very favourable.
The 26 per cent of Hammerson’s properties that are located in France generally appear to have better prospects than those in the UK. Indeed, whereas investment markets in the UK dipped in the second-quarter, activity was at record levels in France during the first half. The group should also continue to benefit from spending on its £1bn development programme during the next 18 months.
Broker Cazenove forecasts full year NAV of 1,664p (2006: 1,500p), rising to 1,830p in 2008.
| Hammerson (HSMO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,312p | MARKET VALUE: | £ 3,812m | |
| TOUCH: | 1311-1312p | 12M HIGH: | 1,836p | LOW: 1145p |
| DIVIDEND YIELD: | 0.9% | TRADING STOCK: | nil | |
| DISCOUNT TO NAV: | 18% | |||
| INVEST PROPERTIES: | £6.7bn | NET DEBT: | 54% | |
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| Half year to 30 Jun | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 1221 | 385 | 112 | 6.4 |
| 2007 | 1600 | 368 | 127 | 12.0 |
| % change | +31 | -4 | +13 | +88 |
Ex-div: 19 Sep Payment: 19 Oct |
||||
At a discount of 21 per cent to forecasts the shares are not the best value out of the UK's battered blue chip reits, but nevertheless, they look good value.
Last IC View:Good value, 1590p, 2 Mar 2007
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-IC-1.6.1b-prod - 17/12/2008 12:46:12 - jonathan.furseftb
