UPDATE: Hammerson Lifts Dividend As Markets Recover

2nd Aug 2010 09:34

(Adds detail, comment.) By Anita Likus Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Hammerson PLC (HMSO.LN), the retail and office landlord with operations in France and the U.K., Monday became the U.K. first real estate investment trust to raise its dividend since the downturn in property markets, as it said the market was continuing to recover. However, the company remained cautious about its outlook, warning that continued economic uncertainty meant the future was still uncertain. Hammerson reported improved first-half earnings and rental income, but said due to the uncertainty, it will continue to focus on the performance of its assets, increasing income and controlling costs. Still, at 0800 GMT, Hammerson shares were up 15 pence, or 3.8%, to 403 pence in a higher London market, outperforming a 2% rise in the FTSE 100 after it lifted its first-half dividend per share by 2.9% to 7.15 pence. Hammerson "is doing all the right things" and is the only major real estate investment trust to increase its dividend, said Evolution Securities analyst Alan Carter. He said that he supports the company's strategy as Hammerson is the only major REIT to have changed its corporate structure following last year's rights issue. Chief Executive David Atkins told reporters on a conference call that he will focus on improving the portfolio, maximising income from assets as well as recycling its portfolio by selling mature assets and buying distressed properties. "I wouldn't say that I see a deluge of assets on the market," said Atkins, but "there are distressed assets and if one can move quickly, you can obtain an advantage." Hammerson bought Leadenhall Court in the financial district of London, the City, from the receivers of the White Tower portfolio, for GBP65 million. Atkins said Hammerson bought the property in just under five days. The CEO added that he has some GBP600 million to GBP700 million of facilities he can tap into to make purchases but doesn't envisage increasing debt to buy assets. Rather, Hammerson will sell mature assets within the portfolio to produce buying power. Hammerson has also advanced its development pipeline in the U.K. and France, starting enabling works on site at Les Terrasses du Port, Marseille, in France this month and further progressing its retail and office development pipeline in the U.K. The company is seeking pre-lets for its City development site, Bishops Place, and wants to submit a planning application for its City development site St. Alphage before the end of the year. Hammerson reported first-half adjusted net asset value per share up 7.8% to 454 pence while the value of its portfolio rose 7.3% in the U.K. and 0.5% in France. The company owns assets in the U.K. and France but mainly focuses on retail, with over GBP1.6 million square meters of retail space and 170,000 square meters of office space. It suffered in the recession when property prices fell and as many retailers went into administration, which hit incoming rent and created vacancies. But the market has turned and Hammerson reported improved occupancy levels since December, at 96%, with particularly good lettings progress in the second quarter. Like-for-like rental income rose 5% to GBP140 million but overall net rental income was down 10.5% due to property disposals. First-half profit before tax for the six months to June 30, rose to GBP335.6 million from a loss of GBP818.5 million. Net debt was unchanged at GBP2.1 billion at June 30, but because the portfolio increase in value, gearing was 67%, compared with 72% at the end of last year. Hammerson shares closed Friday at 388 pence, giving the company market capitalization of GBP2.75 billion. -By Anita Likus, Dow Jones Newswires; +44 20 7842 9407; [email protected] (END) Dow Jones Newswires August 02, 2010 04:34 ET (08:34 GMT)