Hammerson Net Asset Value Gains as Rental Income Climbs

Hammerson Plc, Britain’s third-largest real estate company by market capitalization, said the value of its properties climbed in the first half on rising rents.

Adjusted net asset value increased to 551 pence ($8.48) on June 30 from 542 pence six months earlier, the London-based company said in a statement today. Adjusted earnings per share gained 8.8 percent to 11.1 pence and Hammerson increased its dividend for the first half by 7.8 percent to 8.3 pence.

“While household budgets in the U.K. and France remain under pressure, there are encouraging signs of improvement in macroeconomic conditions in the U.K.,” Chief Executive Officer David Atkins said in the statement. Hammerson’s management of its shopping malls “allows us to maintain high occupancy, secure new tenants on attractive terms and consistently grow rental income.”

Hammerson is spending more on its leisure stores and luxury-outlet malls as it seeks to increase shareholder returns at a time of weak economic growth in Europe. The developer invested 78 million pounds in Value Retail Plc, Europe’s third-biggest outlet-mall owner by floor space, in June and July, according to today’s statement. Hammerson is developing a cinema, catering and bingo stores in Glasgow and is bringing more restaurants into other malls.

Hammerson was unchanged at 520.5 pence in London trading, after declining for five straight sessions. The shares have gained 6.6 percent this year, while the FTSE 350 Real Estate Investment Trust Index has advanced 11 percent.

The amount of money spent by overseas visitors at Value Retail’s European outlet malls has gained 39 percent this year, led by Chinese shoppers, Atkins said on a call with reporters. Hammerson’s Value Retail stake now accounts for about 15 percent of the mall developer’s business and the company will try to increase its holding as smaller investors sell out, Atkins said.

Net initial yields may fall “slightly” in the second half from the current level of 5.3 percent, meaning the value of Hammerson’s malls would rise, Atkins said.

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