Broker snap: Hammerson in good shape

3rd Aug 2010 12:42

Panmure Gordon has its target price for Hammerson under review after the property company reported an encouraging set of results."We believe the business is in good shape for the future with a resilient balance sheet and an attractive collection of assets. That said, we continue to feel that the company's exposure to UK shopping centres and more sluggish French property market continues to take the edge off the attractive opportunities presented by London offices," the broker said. Despite those misgivings the broker believes the shares are not expensive and is comfortable with its current rating of "hold" for the shares.The broker looks set to bump up its forecasts for adjusted profits and net asset value after Tuesday's figures. "Looking at the rental markets, we believe that the prospects for continued growth in London offices remain encouraging, underpinned by a fundamental imbalance between growing demand (particularly in 2014 and 2015 that will see significant lease expiries). Hammerson looks well placed through a combination of existing assets, coupled with future development schemes and further potential capital recycling," Panmure Gordon opined.That's the good news. "The retail picture looks less rosy, as consumer confidence has taken a downtown in both the UK and France, and the outlook for retail sales growth remains fragile. The concern is perhaps being felt most at shopping centres, where the company has lost tenants on lease expiries and short-term lets are being agreed at 25-30% below ERV [estimated retail value]," the broker continued.