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The third-largest real estate investment trust in the UK is keeping in line with its peers as higher rental incomes, increased asset valuations and further acquisitions are evidence of its success. In the first six-months of the year, Hammerson saw its net income rise by 4.6% and its net profits jump by 349% to £362.9 million. However, the revaluation of £224.5 million over-inflated the profits.
The positive shift in consumer sentiment has encouraged retailers to expand their operations, and in turn has helped Hammerson rent out its retail units for, on average, 7% above their lease valuation. Hammerson has a shareholding in some well-known properties around the UK , such as the Bullring in Birmingham and Brent Cross shopping centre in London. The company has the contract to develop the Whitgift shopping centre in Croydon. Hammerson had an ‘encouraging’ first-half, and net asset value has increased by 6.8%.
In September, the company raised £399 million through a shares placing in order to build up its war chest. The stock initially dived on the announcement, but since then has more than recouped its losses. A total of £140 million was invested in the High Cross shopping centre in Leicester, and now Hammerson owns the property entirely. The London-listed company acquired a 47% stake in a luxury retail fund called Value Retail for £100 million, and the property fund has retail outlets in Amsterdam and Prague. Hammerson also hopes to expand its operation in Brent Cross. The string of investment is a clear sign that Hammerson is confident of its future earning potential, and its diversification across the UK and conventional Europe is prudent risk management.
The consensus is for revenue of £525 million, and adjusted net income of £309 million when Hammerson reports its full-year numbers. These forecasts represent a 61% jump in revenue and a 75% increase in adjusted net income. The property company will also report its second-half numbers. The market is expecting sales of £176 million, which compares with the first-half revenue of £146 million, which missed analysts’ estimates of £166 million.
Equity analysts are bullish on Hammerson, and out of the 17 recommendations, nine are buys, six are holds, and two are sells. The average target price is £7.02, which is 2.5% above the current price. Investment banks are extremely bullish on British Land, and out of the 18 ratings, 16 are buys, and two are sells. The average target price is £8.96, which is 8% above the current price.
The share price has been trading sideways recently, and any moves lower are likely to find support at the 200-hour moving average of £6.80. If this level is held the upside resistance at £7.05 will be the target. A drop below the 200 H-MA will bring the downside support of £6.20 into play.