Retail landlord Hammerson has been coping admirably with tough conditions and adjusted EPS grew 6.3 per cent in the period. But property valuations fell slightly, so the net asset value (NAV) – the value of its portfolio, minus debt – barely budged. That doesn't leave the shares, which have raced up since December, as quite the value opportunity they once were but, with more quantitative easing on the way, we remain bullish.
Earnings grew thanks to solid growth in rental income from shopping centres like Brent Cross in London and Union Square in Aberdeen, combined with an initiative to reduce the cost of debt by buying back bonds and cancelling interest-rate swaps. Occupancy has fallen slightly since the year-end, but chief executive David Atkins says it has risen since the winter wave of administrations – including Senza, Peacocks and Game – and is broadly stable.
Overall, the portfolio was written down just 0.1 per cent in value, although that would have been greater but for Hammerson’s decision in February to sell its London office assets. It agreed a sale value for most of these last month that underpinned a 4.7 per cent valuation uplift.
Broker Investec Securities expects year-end NAV of 514p (June 2012: 535p).
HAMMERSON (HMSO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 463p | MARKET VALUE: | £3.30bn | |
| TOUCH: | 463-464p | 12-MONTH HIGH: | 486p | LOW: 339p |
| DIVIDEND YIELD: | 3.7% | TRADING PROP: | £635m | |
| DISCOUNT TO NAV: | 13% | |||
| INVESTMENT PROP: | £4.98bn | NET DEBT: | 49% | |
| Half-year to 30 Jun | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 515 | 174.8 | 24.1 | 7.3 |
| 2012 | 535 | 13.9 | 1.7 | 7.7 |
| % change | +4 | -92 | -93 | +5 |
Ex-div: 15 Aug Payment: 5 Oct | ||||
