Hammerson (HSMO) wrung a commendable level of income growth out of its property portfolio in the first half. Underlying earnings per share rose 8.8 per cent - just as chief executive David Atkins promised in February. About half the profit uplift came from acquisitions, yet like-for-like net rental income, up 2.5 per cent, also provided a boost. The leasing environment for major shopping-complex landlords in Britain remains resilient, while in France, where times are tougher, rents are indexed to inflation, making rental growth quasi-automatic. The company's investment in Value Retail - the company behind luxury discounter Bicester Village - has been another very useful contributor to profit growth.
But valuations continue to sag, with capital expenditure offsetting a slight gain from rising rental values in the first half. The standout underperformer was retail parks. Mr Atkins blames the sector's 1.5 per cent capital loss on the failure of big-box retailers such as Comet, Dreams and JJB Sports. Because the range of retailers that lease retail park outlets is fairly narrow, Hammerson and other landlords were forced to cut rents to attract new tenants.
With their much broader retailer base, UK malls performed better - up 0.7 per cent over the six months. The company's vast regeneration project on the waterfront in Marseille was also a positive contributor to portfolio growth, largely accounting for the 3.4 per cent gain in the development portfolio.
Brokerage Investec expects adjusted book value per share to finish the year unchanged at 551p.
HAMMERSON (HMSO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 520p | MARKET VALUE: | £3.71bn | |
| TOUCH: | 519-520p | 12M HIGH / LOW | 557p | 447p |
| DIVIDEND YIELD: | 3.5% | TRADING PROP: | £16m | |
| DISCOUNT TO NAV: | 5% | |||
| INVESTMENT PROP: | £6.2bn | NET DEBT: | 56% | |
| Half-year to 30 Jun | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 535 | 13.9 | 1.7 | 7.7 |
| 2013 | 547 | 80.8 | 11.0 | 8.3 |
| % change | +2 | +481 | +547 | +8 |
Ex-div: 21 Aug Payment: 3 Oct | ||||
