Broker snap: Investec downgrades Hammerson after strong run

30th Jul 2012 10:12

Investec has downgraded its rating for retail-focused real estate group Hammerson from 'hold' to 'sell' after the recent strong performance in the shares."Hammerson has been the best performing UK major this year. It has rebounded from being oversold in Q4 2011, with performance augmented by the sale of the office portfolio, occasional and spurious bid stories, and a focus on low gearing and income growth," the broker said in a research note.Investec highlights that, since the appointment of David Atkins as Chief Executive Officer, Hammerson has undergone a "material change". The company is no longer a developer/owner of London and Parisian offices and UK and French retailing; it is now a lower-risk, pure retail specialist focused on lower gearing and earnings and hence dividend progression."While we fully commend this strategy, the underlying performance of the group's chosen asset class remains sub-optimal, with minimal rental and capital growth, a demanding discount to NAV [net asset value] relative to peers, and just a 3.7% dividend yield. "Augmenting low growth through selective development/refurbishment and acquisition will occur but we think forward trajectory on these metrics will be slow, and relatively low."The broker says that the shares are now fully valued and ahead of its new target price of 415p, down fro 425p previously. Shares were down 0.09% at 466.6p by 10:32 on Monday.BC