HSBC downgrades Hammerson after recent run

24th Apr 2014 12:52

Despite reporting an decent first-quarter statement, retail-focused property group Hammerson received a ratings downgrade by HSBC on Thursday from 'overweight' to 'neutral' on the back of the stock's recent strong run."HMSO continues to deliver evidence of positive returns on invested capital and a level of operating efficiency that has resulted in strong share price performance year-to-date," HSBC said.As of Wednesday's close, the stock had risen nearly 16% since the start of 2014, 6% ahead of the FTSE EPRA Global Real Estate Index and 11% ahead of the STOXX 600 Europe Index."As a result, HMSO has moved into a 'neutral' bandwidth based on our valuation framework and so we downgrade to 'neutral' (from 'overweight') albeit with a raised target price of 630p (from 600p) reflecting our updated estimates."Nevertheless, HSBC admitted that the tone of the first-quarter statement was "upbeat" as the company, which owns the Brent Cross shopping centre in London and the Bullring in Birmingham, saw improved leasing demand over the three months to March 31st.During the period, Hammerson signed 80 new leases across its portfolio for 22,000 square metres, representing over £5m per annum. Leases were signed at 8% above estimated rental value (ERV) across its larger UK division, and were 1% above ERV in France.Overall occupancy across the portfolio was 96.6% by the end of the period, unchanged from the same date the year before.The stock, which gained strongly on Wednesday, was down 1.3% at 573p by 13:02 on Thursday.BC