Hammerson to hold off on new schemes until 2010

Hammerson has said it will not launch any new major development projects in the UK or France before the end of 2009. The UK real estate investment trust said potential tenants in the retail sector are taking a more cautious stance on leasing space and demand for office space has dipped significantly.

'We continue to progress planning and design stages of several schemes and seek pre-lets, whilst limiting further capital expenditure,' Hammerson said in a statement on Monday. The company has completed four major developments in the last four months. The 30,900-m² office development at 125 Old Broad Street in London was completed in July. The scheme is 47% let, which Hammerson said, exceeds the interest cost.

Three major retail schemes opened in September 2008: Highcross in Leicester; Cabot Circus in Bristol and O'Parinor in Paris. The centres were 86%, 91% and 94% let by rental income and the additional income from these schemes will increase Hammerson's annual rents by £30 mln (EUR 37 mln).

Hammerson said that potential tenants are showing caution about committing to new schemes but that its own dominant shopping centres continue to attract retailers, particularly international chains. In offices, the turmoil in the international financial markets has 'substantially reduced' the demand for space, leading to a reduction in rental values in the City of London by about 15% during 2008. Rent levels in Paris have declined at a more modest rate.

Hammerson operates in the UK and France where it invests in, manages and develops major city centre shopping centres and office buildings. Its portfolio was valued at £7.1 bn (EUR 8.7 bn) at end-June this year. The portfolio includes 14 shopping centres, 19 retail parks and eight office properties.