Hammerson down to one office property -UPDATE

1st Oct 2012 07:11

Property firm Hammerson has sold one of its last central London office properties as it pushes forward with plans to focus solely on retail space. The deal means the firm has just one office building left in its portfolio.Hammerson said it had exchanged contracts for the sale of 10 Gresham Street, London EC2, for £200m, representing an initial yield of 5.25%. The building was bought in August 2010 for £175m in a 30:70 joint venture with Canada Pension Plan Investment Board.The deal with Kumpulan Wang Amanah Pencen, the Malaysian state pension fund, means Hammerson's share of the proceeds will be £60m.Chief Executive David Atkins said the transaction further increased his firm's retail focus and meant the firm had capitalised on investor demand to secure an exit above book value.The deal comes after the company exchanged contracts on the majority of its office portfolio with Brookfield Office Properties for £518m in June.Hammerson is now marketing Stockley House, the final office investment in its portfolio.Analysts at Seymour Pierce said Hammerson had chosen to focus on retail as management believed that investors valued single focus REITs more highly."Although this is not borne out entirely by the evidence - Capital Shopping Centres Group trades at a 15.6% discount to last net asset value of 390p and 12.7% to consensus 377p - we would not rely on that comparison since CSCG has financial structure challenges which we have regularly discussed," they said in a note.