Value shares tend to be cheap for a reason. The trick is to distinguish companies that are cyclically out of favour from those in long-term decline. Retail landlord Hammerson – whose shares are trading at 32 per cent below their underlying book value – almost certainly belongs to the former camp.
- Share price 30 per cent below NAV
- Prime portfolio
- Conservative approach to development
- Sound balance sheet
- Weak outlook for UK retail
- Exposed to euro
The reason its shares are cheap is no secret. The bulk of Hammerson's portfolio is shopping centres and retail parks in the UK (73 per cent) and France (27 per cent). That's a tough place to be, as the company's latest trading update showed. Footfall and sales in its UK centres were down 1.9 per cent and 3.8 per cent, respectively, against the prior year – and the fall was even worse in France, which also brings Hammerson exposure to the euro.