Hammerson disposals lower profits but CEO gives upbeat outlook

(Sharecast News) - Retail-focused property investor Hammerson reported a slight fall in adjusted profits in the first half as the company continues to sell off assets and cut debt amid ongoing declines in rental income and valuations. Adjusted earnings came in at £49.5m in the six months to 30 June, down from £55.9m a year earlier, as gross rental income reduced to £94.4m from £106.3m.

The company, which earlier in the week sold off its stake in the Bicester Village operator Value Retail to LVMH-backed L Catterton for £1.5bn, generated £600m in cash proceeds.

However, a £483m impairment charge from the investment in Value Retail - after the investment had been reclassified as an asset held for sale - resulted in a reported loss of £517m for the first half, down from a profit of £1m last year.

The company said it will use the proceeds from the Value Retail disposal for a "significant immediate deleveraging", as well as reinvestment into higher yielding assets and a share buyback worth £140m.

Hammerson, which saw the net value of its assets fall to £1.91bn from £2.46bn at the start of the year, ended the half with net debt of £1.22bn, down from £1.33bn six months earlier. The group lifted its interim dividend to 0.756p, up from 0.72p a year earlier.

"We are realising the benefits of our investments in recent years and with the agreed disposal of Value Retail, we now have the capacity and capability to accelerate growth and value creation," said chief executive Rita-Rose Gagné.

"In the first half, we also completed our £500m disposals programme, realigning our core portfolio to leading city centre destinations, whilst further strengthening the balance sheet. We now have a strong, scalable platform as we look to drive further operating leverage."

Shares were down 3.4% at 28.64p by 1051 BST.