Hammerson share price edges lower despite full-year profit growth

British real estate investment trust (REIT) Hammerson (LON:HMSO) today reported a rise in full-year profit and lifted its dividend as increasing demand for prime retail space boosted rental growth across its portfolio.

The group, which owns large shopping centres including the Bullring in Birmingham and Brent Cross in North London, reported a pretax profit of £703.1 million for the year ended December 31 — more than double the £341.2 million posted a year earlier. The profit was driven higher by a big gain in the value of its property portfolio, which added £436.8 million to the pretax profit for the year, against only £90.3 million last year.

Comparable net rental income rose 2.1 percent to £305.6 million, “demonstrating the success of pro-active asset management,” Hammerson further revealed. The company noted that its occupancy rate remained strong at 97.5 percent, although slightly lower than the 97.7 percent reported at the same time last year. Leases for the year were signed at six percent above estimated rental value over the year, and around five percent above previous passing rents.

Reflecting the strong set of results, Hammerson lifted its final dividend to 11.6p per share from 10.8p last year. The increase brings the REIT’s total dividend for the year to 20.4p per share, up from 19.1p.
CEO David Atkins commented on the group’s annual performance: “We have delivered strong results on the back of a significant uplift in asset valuation and continuing income growth. The recovery in UK consumer sentiment has continued to strengthen, driving increased demand from retailers for prime space, which is now translating into estimated rental value growth across the whole portfolio.”
Despite the upbeat report, Hammerson’s share price edged lower in early trading today. As of 08:21 GMT, the stock was changing hands at 687.50p – 0.52 percent down intraday. According to the Financial Times, the 14 analysts projecting 12 month price targets for the FTSE 100-listed group have a median target of 700.00p, with a high estimate of 750.00p and a low of 574.00p. As of 14 February 2015, the consensus forecast amongst 25 polled investment analysts covering Hammerson has it that the company will outperform the market.
As of 09:42 GMT, Monday, 16 February, Hammerson plc share price is 692.00p.