“Hammerson’s exposure to premium retail shopping sites is clearly serving it well but all its shares have done is fall since December’s announcement of an all-share offer for Intu and as a result the bidder looks likely to join the target by dropping into the FTSE 250 after this week’s reshuffle.
“This suggests that investors fear Hammerson is potentially doubling down on a challenged sector with its swoop for Intu, rather than enhancing its long-term prospects, despite boss David Atkins’ argument that bricks-and-mortar stores remain important as a showcase for the products and customer service provided by retail brands, either directly or via click-and-collect.
“Whether click-and-collect on its own justifies some of the large store estates owned by some brands remains debatable and investor scepticism is reflected in the hefty discount to net asset value (NAV) at which shares in Hammerson (and Intu, for that matter) continue to trade.
“This is a stark contrast to the real estate investment trusts which operate in storage or warehousing and logistics site, with the latter, such as Segro, being seen as a more direct play on the rise of online retail.
Pence | Share price | Historic NAV | Premium / (discount) |
Safestore | 509.5 | 329.0 | 54.9% |
Big Yellow | 842.5 | 640.8 | 31.5% |
Londonmetric Property | 178.6 | 155.7 | 14.7% |
TRITAX Big Box | 143.4 | 133.3 | 7.6% |
Newriver | 317.0 | 297.0 | 6.7% |
SEGRO | 589.8 | 556.0 | 6.1% |
Shaftesbury | 986.5 | 952.0 | 3.6% |
Hansteen | 136.8 | 132.5 | 3.2% |
A & J Mucklow | 522.0 | 506.0 | 3.2% |
Workspace | 985.5 | 1,014.0 | -2.8% |
CLS | 224.5 | 268.5 | -16.4% |
Capital & Counties | 276.4 | 334.0 | -17.2% |
Derwent London | 2,897.0 | 3,582.0 | -19.1% |
Great Portland Estates | 647.5 | 813.0 | -20.4% |
Town Centre Securities | 288.0 | 375.0 | -23.2% |
British Land | 652.8 | 939.0 | -30.5% |
Land Securities | 949.1 | 1,432.0 | -33.7% |
Hammerson | 477.0 | 776.0 | -38.5% |
INTU | 216.4 | 411.0 | -47.3% |
Source: Company accounts, Thomson Reuters Datastream. Based on last published net asset value per share figure.
“The gap between the share price and net and NAV has continued to grow, since Hammerson’s NAV per share rose from 771p to 776p during the second half of its financial year, while its shares have fallen from 534p to 477p since it announced the Intu deal just before Christmas.
Source: Company accounts
“However, neither this nor a chunky 5.6% prospective dividend yield for 2018 seem likely to be enough to spare Hammerson from demotion from the FTSE 100 this week, after a 12-year stint within the UK’s premier stock market index.
| Dividend Yield |
Newriver | 6.8% |
INTU | 6.5% |
Hammerson | 5.6% |
British Land | 4.8% |
Hansteen | 4.6% |
Londonmetric Property | 4.5% |
Land Securities | 4.5% |
A & J Mucklow | 4.4% |
Town Centre Securities | 4.2% |
TRITAX Big Box | 4.2% |
Big Yellow | 4.0% |
Safestore | 3.2% |
Workspace | 3.1% |
SEGRO | 3.0% |
CLS | 2.9% |
Derwent London | 2.2% |
Great Portland Estates | 2.0% |
Shaftesbury | 1.7% |
Capital & Counties | 0.5% |
Source: Digital Look, consensus analysts’ forecasts, Thomson Reuters Datastream
“An uptick in UK consumer confidence (and wage growth) would perhaps help retailers and therefore their landlord, Hammerson, to start performing again and convince investors that the gap between the REITs share price and net asset value is simply too big.
“For the moment, though, fears over the future of bricks-and-mortar shops are trumping all other considerations, especially as consumer spending seems subdued and the household savings ratio relatively low, even though unemployment is low and the economic upturn nearly nine years old.”