Hammerson carries a net debt of £2 billion and is 52% geared, covering interest on its debt 2.6 times. Most of its debt (88%) has been in long-term fixed rate bonds. Hammerson notes that, "the number of international banks willing to lend to commercial real estate has fallen, and in light of this, their funding strategy in 2011 has been to address near-term maturities early." Accordingly the firm has signed over £650 million of new credit facilities. There will be a shortage of finance in the market.
Hammerson is only committed to one development at present, which is in France, but it has a pipeline of developments including Sevenstone in Sheffield, The Orchard Centre in Didcot, Principal Place in London EC2 and Eastgate Quarters in Leeds, which are two to four years away from completion if work commences at the earliest opportunity. It has an extensive programme of extensions and refurbishments pencilled in for this year and next, the biggest of which is Centrale in Croydon.
David Atkins, CEO, said:
"Following the review of our strategy we will focus on being the best owner-manager and developer of retail property within Europe. Hammerson has created a retail business delivering outperformance from prime assets in winning locations. We now intend to sell our standing office investments over the medium term to maximise returns, redeploying capital into the retail sector to exploit our expertise and build on our existing scale. This will create efficiencies that lead to further cost savings and income growth from our portfolio."
Hammerson announced an increased dividend, up 5.7% for a total dividend for the year of 16.6p. The NAV is £5.30 per share. The shares closed last night at 385.7p which values the firm at £2.744 billion.