Value of Hammerson’s property portfolio falls by almost 10%

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by Lin Freestone

Hammerson, the property firm which operates principally in the retail sector, has recorded pre-tax losses of £417.1m in the first six months of 2008, and cut the value of its property portfolio by 9.2% to £407m.

Up to 75% of Hammerson’s business comes from its retail property business and it has interests in 14 shopping centres and 19 retail parks across the UK and France.

Two new retail projects due to open in September at Bristol and Leicester have secured 85% of their predicted rent. In order to encourage uptake in its centres, Hammerson has increased the rent-free period at its new retail developments.

Instead of the standard six months on a 10 to 15 year lease, Hammerson now offers a rent-free period of between 21 and 24 months.

Growth in net rental income was 4.4% on a like-for-like basis at the end of June, and vacancy rate was 2.3%. The company is not planning any new projects before summer 2009.

John Nelson, the chairman of Hammerson, has said that the conditions in the international debt markets are the most difficult to have been experienced for many years. This has led to falls in real estate values in a number of markets and it is difficult to predict when conditions will improve.

However, given the strength of Hammerson’s business and its experienced management team, he believes the company is in a good position to exploit these more difficult market conditions.