Profits drop at Hammerson, rental income higher

1st Aug 2011 07:10

Retail-focused real estate group Hammerson saw profits plummet by 42.6% in the half year ended 30 June, despite net rental income coming in higher.The firm, which owns shopping centres Brent Cross and the Bullring, reported the pre-tax profit dropped from £335.6m to £192.8m, as revaluation gains on its property portfolio more than halved from £258.7m in 2010 to just £121.1m this year.Earnings per share fell marginally from 9.7p to 9.6p, due to lower profit and an increased number of shares in issue.Net rental income, however, grew 2.8% from £140m to £143.9m. While the firm lost out on £14.7m of income from properties sold in 2010 - which offset the £13.4m made from acquired properties this year - on a like-for-like basis, net rental income increased by 3.9%, driven by lettings and rent reviews in the UK and indexation in France.Hammerson said that this like-for-like growth "demonstrat[es] continued tenant demand for high quality assets in thriving locations, and success of asset management initiatives."The group said that its "regionally dominant" shopping centres and retail parks are trading ahead of national benchmarks, and has seen little impact from the recent rise in administrations in the UK retail market.At the end of the period, group occupancy was 97.2%, above the firm's target of 97%, showing an improved letting performance in the second quarter (occupancy was 96.7% in the first three months of the year)."These results show continued momentum in our business, driven by high quality assets coupled with focused management initiatives. In addition we have enhanced the prospective returns from the portfolio through both targeted acquisitions and development activity, and our flexible financing structure will allow us to take advantage of further investment opportunities," said chief executive David Atkins.The dividend per share was raised 2.1% from 7.15p to 7.3p.BC