Hammerson completes move to retail

Hammerson has said it remains 'cautious' about the economic outlook in the UK and Europe, even as it completed its strategic move from office landlord to retail landlord.

Announcing the disposal of its final office property, Stockley House for £42m, 10% above book value, it confirmed that it is now exclusively retail focused.

In a trading update for the period from July 1st to November 8th it expressed "confidence in our ability to grow underlying rental income".

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Hammerson had occupancy of 97.3% at September 30th (2011: 97.1%) and leasing in the period was 5% above estimated rental value (ERV).

UK tenants' sales increased by 3.2% in its UK shopping centre portfolio, notwithstanding a small decline in footfall of 1.1% compared to the third quartr of 2011. Over the quarter sales were particularly strong in August and September with Bullring, Highcross and Union Square performing well. In France, tenants' sales increased by 0.3% across the portfolio in line with a slight increase in footfall.

There were 73 units in administration at September 30th 2012, broadly unchanged since the half year, of which 50 were still trading. Units in administration represent 1.7% of group rents. However, it did stress that recent tenant administrations may impact occupancy over the remainder of the year.

Its major retail and leisure development at Les Terrasses du Port, Marseille, is now 80% pre-let. During the period, pre-letting agreements were exchanged with Intimissimi, G-Star, Kusmi Tea and Calezdonia. Construction is on schedule and on budget, with the project expected to open in spring 2014.

At October 31st 2012, net debt was £2bn. Proforma cash and unutilised facilities were £850 million, all available for further investment.

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