Hammerson pre-tax profit up sharply on property sales (UK)

Hammerson plc reported a sharp rise in first-half pre-tax profit to £64.6m, compared with £47.4m a year earlier, as the UK property group took advantage of the strong investment market to dispose of a number of properties for £245m.

This was slightly below the 65-66 mln stg range expected by analysts.

Before the exceptional profit of 22.4 mln stg generated from the property sales, compared with an exceptional profit of 3.7 mln last time, profit before tax decreased by 1.5 mln stg to 42.2 mln.

The group´s property portfolio was valued at 4.0 bln stg at June 30.

The adjusted net asset value per share at the end of June was up 5.1 pct to 844 pence from 803 pence a year earlier.

The vacancy rate within Hammerson´s portfolio decreased to 8.1 pct at June 30 from 9.2 pct at Dec 31 2003.

Hammerson said although UK retail property rental values are expected to continue to show strong growth, the rate of growth is expected to slow. 'Investor sentiment towards the retail sector remained positive, leading to a further increase in values,' the company said. 'Some slowdown in the rate of retail sales growth may occur in the second half of 2004 and in 2005.
Nevertheless, rental values of prime retail assets are expected to show continuing growth.”

In France, there has been an increase in enquiries from retailers for space in the group´s centers and is supporting current rental levels. 'Investment demand remains strong. However, with existing investors reluctant to dispose of major shopping centers, there have been few transactions,' Hammerson said.

In Germany, rents and values for retail properties have weakened. 'Although there are signs of economic recovery, the German retail property market is likely to remain difficult,' the company said.

In office property, sentiment in the central London office markets showed a marked improvement in the first half of the year, with an improvement in demand for office space. However, due to the amount of space available in the City of London, rental values showed a marginal decrease.

In central Paris, although there was an increase in the level of enquiries from potential occupiers in the first six months of 2004, the overall vacancy rate rose slightly and prime rents softened.

Source: Freeman

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