Hammerson and Other Commercial Investors in the Soup

In real estate news from the UK, shopping center owners Hammerson has reported a profit for the first half of this year. The third largest real estate trust in the UK, Hammerson owns or is partners in some of Europe’s most visible shopping centers. With many retailers going under, Hammerson’s more than 5 percent asset increase is a bit of good news – but is it?

60 Threadneedle Street, London

60 Threadneedle Street, London - a choice Hammerson property


A report from Reuters Hammerson’s first half situation is revealed showing the firms pre-tax profit at 192.5 million pounds. According to the news, this is an drop, year-to-year, of some 42.6 percent.  Chief Executive David Atkins commented in a statement (Reported by Tom Bill) :

 “Our regionally dominant shopping centres and convenient retail parks are trading ahead of national benchmarks and continue to attract successful retailers. Despite a challenging retail backdrop in both our markets, we have seen little impact from the recent rise in UK retail administrations.”

This news comes on the heels of  Hammerson’s head of London Group, Martin Jepson, having stepped down. Peter Cole, Executive Director and Chief Investment Officer there, has assumed Jepson’s spot during the interim, but the message here seems pretty clear. Any company climbing out of the recession last year, only to dump half the ROI for investors, is going to lose someone. The chart below from Hammerson shows the tale of the tape.

Return on equity for Hammerson so far this year

The return on equity at Hammerson so far this year - courtesy Hammerson report half year

Hammerson’s CEO David Atkins approved the sale of over 500 million pounds worth of Hammerson properties to shuffle debt and fund further acquisition last year. Simon Packard of Bloomberg reported on Hammerson’s over 370 million in mall acquisitions, as well as the company’s intended building developments. So, on the face of this news, it looks like forward momentum will have to suffice in place of real profit for Britain’s third biggest real estate investment house – and their investors, or course.

Last month Hammerson shareholders dumped over 85 million shares of the company’s stock, a bad day that sent the sector into a mini-free fall for a spell.  Let’s face it, when Cadillac Fairview (Hammerson’s biggest single investors)  lost their confidence… It remains to be seen if Atkins can bail out what appears to be a listing real estate investment ship. In fairness, Atkins and Hammerson are not alone out to sea. Aflac lost over half its forward momentum and profits, Japan’s Nomura is sliding downhill faster than even Hammerson (PDF), and the US debt crisis looms far larger than shopping center investment woes.

We will follow Hammerson via alert to keep you abreast of news from them. More on Nomura and other key segment investors later on this week.

For those interested in Hammerson’s half year numbers, that report is here in PDF form.


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