Hammerson H1 profits boosted by record leasing activity

Retail property developer Hammerson reported a rise in first half pre-tax profits of £289.7m from £167.2m boosted by record leasing activity and positive capital value growth helped by high-growth markets in Ireland and premium outlets.

It also warned that UK retailers were experiencing cost pressures from sterling weakness, adjustments to business rates and higher minimum wages.

Total leasing volumes were up 44% at £18.1m from 228 deals compared with 158 in 2016 and 8% ahead of estimated rental value.

Net rental income rose 9.7% to £184m, while adjusted profits were up 6% to £119.4m. The interim dividend was lifted to 10.7p a share from 10.1p.

European Public Real Estate Association net asset value rose 4.2% to £7.71 a share from £7.39.

“Against a backdrop of continued political uncertainty in the UK associated with the General Election and Brexit negotiations, consumer confidence has been subdued during the first half of 2017,” Hammerson said.

“Retail sales at our centres fell by 3.9%, calculated on a same centre basis. Sales performance by centre and retail category has been mixed with stronger performances from men's fashion, sound, picture & technology and sports & outdoors offset by weak mid-range fashion and health & beauty sales.”

“We believe our centres drive additional online sales for our tenants, which is not captured in our reported sales figures.”

"This performance is particularly pleasing in the context of a more uncertain political and economic backdrop and structural shifts in the retail sector," Hammerson said.

Hammerson shares were down 0.3% to 582.15p at 0949 BST.