Hammerson 'upbeat' despite turbulent market conditions

Hammerson has said it remains upbeat on its prospects for 2008 despite further declines in UK property values in the first quarter of the year and signs of softening in the office investment market in France, which accounts for 30% of the UK commercial property developer-owner's investment portfolio.

'We have made good progress in all areas of our business this year,' Hammerson chairman John Nelson said in a statement. 'We have a retail and office portfolio of the highest quality, both in the UK and France. It provides the potential for further good income growth over the next three years, both from the existing investment assets and the current development projects as they are completed and let. We have a strong balance sheet and are well-financed. Hammerson is therefore in a good position to weather the current market uncertainties and take advantage of opportunities that may arise.'

While it cited caution in the banking sector in relation to new loans to the commercial property sector, Hammerson said it had secured additional financing of £750mln (EUR 963mln) in the first four months of the year. A large portion of these funds will be used to finance six developments, including two office developments in the City of London, which are currently underway for an estimated total cost of £995mln.

Hammerson said it has leased 34% of its 30,900 m² development at 125 Old Broad Street in London while it is in preliminary discussions with a number of prospective occupiers for a 20,600 m² nine-storey office development at 60 Threadneedle Street. It said its office portfolio in the City of London is 99% let with an average unexpired lease of 15 years. Although it pointed to signs of softening in the French office investment market, it noted its offices in Paris are 93% leased.

In the retail sector, Hammerson said many UK retailers are continuing to face challenging conditions as weaker consumer confidence affects retail spending. Nonetheless, it has continued to attract new retailers to two major retail developments in Bristol and Leister to be completed in September this year and noted its vacancy within its shopping centre and retail parks portfolio in the UK remains low at 2.6%. In France, retailers' demand for shopping centre space has remained healthy, Hammerson said.