Commercial Property News

Hammerson Plc. reported a 6.4% dip in the value of its UK and French assets today but robust rental income growth buoyed pretax profits, boosting shareholder returns by 10.5%.

In interim figures for the half-year to June 30, the office and shopping centre investor said the value of its portfolio was still adjusting in line with the year-old British commercial property correction and was now worth £7.093 billion.

Its adjusted net asset value per share dropped 9.9% to £13.92.

The group fell into losses of £417m from a profit of £367m in the same period last year as the value of its properties fell £407m in the half against a gain of £323m last year. Hammerson posted a 5.4% rise in net rental income to £145.8 million against £138.3 million as at June 30 2007. Adjusted pretax profits rose 10.4% to £60.5 million.

Chairman John Nelson said problems which began 12 months ago within the international banking sector were continuing to have a major impact on real estate investment markets, where liquidity depends largely on the availability of debt finance.

"As a consequence, commercial property values in the UK remained under pressure in the first six months of 2008, although the market in France continued to show resilience," Mr Nelson said.

Mr Nelson said the group had a strong balance sheet and had raised £750m of additional committed debt finance in the first six months of 2008.

Capital expenditure totalled £314m, while £73m was raised from disposals. Like-for-like rental income growth was 4.4%.

Mr Nelson added: "The fundamentals of the company's business remain very sound. Our portfolio is of the highest quality, is focused on prime retail and office assets in the UK and France, and generates a robust and growing income stream. Our income will increase significantly over the next few years following the completion of five major developments this year and one in 2009. Our balance sheet is strong and we are well-financed.

The London-based group, which has a portfolio of retail sites in the UK and France as well as London offices, said it was taking a "prudent approach" to its development portfolio given current market conditions and said it was unlikely any of its pipeline of schemes would start on site before summer 2009.

The company said it was progressing the schemes through their feasibility, site assembly and planning stages.

Hammerson's portfolio in the UK fell in value by 9.2% whilst the French portfolio increased by 0.3%. Overall, the group's portfolio showed an underlying decrease in value of 6.4% in the six months to June 30.